World Leaders Demand IMF, WB To Augment Climate Change Financing

Washington: A two-day summit in Paris brought focus on the International Monetary Fund (IMF) and World Banks to own climate change policies amid calls for multilateral development banks (MDBs) to do more to help developing economies access funds to both adapt to climate change and deal with its consequences.

Hosted by French President Emmanuel Macron, the summit aimed to tackle the interlinked challenges of poverty alleviation and climate change and presented an opportunity to refocus the global financial architecture to better address the vast scale of financing needed to meet the world’s climate targets by the end of the decade.

Both the IMF and World Bank have introduced policies in recent years to help countries deal with the climate transition.

Last year, the IMF launched it’s Resilience and Sustainability Trust (RST), with just over $40 billion in funds at its disposal, to offer longer-term loans to finance projects related to these issues. Bangladesh, Barbados, Costa Rica, and Rwanda are the first countries to benefit.

World Bank Former President David Malpass lauded moves under his watch to double climate financing to $32 billion and to put in place a global warming action plan for the period of 2021 to 2025.

But both institutions admit that their financing capacities are currently insufficient to meet the needs of developing economies which the IMF estimates will be well over a trillion dollars per year by 2025.

The most significant breakthrough so far came at the IMF and World Bank spring meetings, when agreement was reached to boost the World Bank’s lending capacity by up to $5 billion per year for 10 years.

However, this was achieved primarily by increasing the bank’s leverage and not through the provision of additional funding from World Bank member countries.

In this regard, the United States, European Union and others have been pushing a series of reforms to the IMF and World Bank since late last year.

These include proposals to reform the governance of the MDBs to ensure a greater role for major emerging markets and developing economies and to expand their missions to integrate climate change financing.

The World Bank’s primary objective is to promote long-term economic development and poverty reduction, while the IMF looks to promote global macroeconomic and financial stability by providing financial and technical assistance and policy advice. Agencies