Rishikesh Ram Bhandary’s Post

Climate negotiators are currently meeting in Bonn (#SB60) to discuss climate finance. Debt distress is restricting the ability of countries to scale up climate action. 21 former finance chiefs call for revamping the G20 Common Framework for Debt Treatment and beyond so that countries can focus on development and climate change. #COP29 #climatefinance https://lnkd.in/dW5PRiiU

Particularly interesting article here on the interrelationship between developing countries, credit and debt, the IMF, and potential greenwashing... The title of "Greenwashing" Structural Adjustment says it all... Definitely worth a read! https://lnkd.in/eFUphG72 Greenwashing Research Project The Credit Rating Research Initiative #creditratings #IMF #debt #climate

Today, Treasury Secretary Janet Yellen called on global financial institutions and creditors to expedite debt relief for low- and middle-income countries—an important step given the urgency of the moment. Debt burdens are one of the greatest obstacles to climate adaptation and the energy transition. Currently, 3.3 billion people live in nations that spend more on debt interest than on healthcare or education. This leaves fewer resources to build climate resilience, adapt to climate impacts, or invest in renewable energy. In a conversation with New America Planetary Politics Senior Fellow Martha M., Laura Kelly from the International Institute for Environment and Development (IIED) shared insights on the interplay between debt burdens, development challenges, and innovative solutions that could both alleviate debt and drive a net-zero future. It’s time for collaborative strategies that promote sustainable development while tackling the climate crisis head-on.

⚡Just in: A NEW report commissioned by the governments of Colombia, Kenya, France, and Germany lays bare the devastating effect of debt burdens for many vulnerable low-income countries. The Expert Review on Debt, Nature, and Climate reveals the extent to which unsustainable debt burdens, loss of in nature, and escalating climate change are compounding one another in a hugely destructive '‘triple crises''. Ali Mohamed, Special Envoy for Climate Change-Executive office of the President of Kenya & Chair of African Group of Climate Negotiators says: “This interim report highlights the inescapable reality that we cannot address the climate crisis without tackling the growing burden of debt. Vulnerable nations are caught in a cycle of borrowing to recover from climate disasters, further straining their economies. It’s time for the global community to come together, not just to restructure debt, but to recognize that investments in nature and climate resilience are fundamental to long-term economic stability. Our goal is to turn this vicious cycle into a virtuous one, where sustainable investments lead to prosperity and resilience, rather than debt distress.” ➡️ For more information, see the full report: https://lnkd.in/dnCiCP_w Center for Global Development, BNP Paribas, University of Massachusetts Amherst, World Resources Institute, Utrecht University, Boston University Global Development Policy Center, Inter-American Development Bank, CEB - Council of Europe Development Bank, Institute of Finance and Sustainability (IFS), Bruegel - Improving economic policy, Council on Foreign Relations, Resilient Earth Capital, Universidad de Los Andes, Universidad Internacional del Ecuador, The Liquidity and Sustainability Facility (LSF), LBBW 

"During the meetings, new pledges of $11B were made to make the World Bank bigger and boost three of its initiatives (the eight Global Challenges Programmes, hybrid capital, and the Liveable Planet Fund). Not only is this amount peanuts compared to what is required under reparative and climate justice; as long as those are debt creating instruments, where the driving question is whether private financiers can profit rather than whether it will actually help people and planet, these initiatives will remain doomed from the start. "The World Bank cannot become bigger before better. A true reform would mean stopping seeking profit-based approaches to attract private sector to the climate space, when we know that private finance is limited for mitigation, neglects adaptation, and is completely inadequate to address loss and damage. A true global reform of IFIs should prioritise grant-based finance, provide measures to increase the fiscal space in the Global South, end their large financing for fossil fuels, and change their governance structures to enable more voice and participation from the Global South." —Joab Okonda, Pan-Africa senior advocacy advisor at Christian Aid ----------------------- **Should we use potential profits to attract the private sector into backing climate finance?** There's an old view of value creation, measured in profit, vs. a more enlightened view based on shared, universal value — harder to put in numbers but far more powerful. Does that mean we shouldn't try to attract the private sector with profits? They can be a major force of momentum, but does it backfire if we lock developing countries in debt? Is there an approach where we offer moderate, long-term profits, allowing countries to get the funds they need without crossing the line into dangerous debt? https://lnkd.in/dR-vmwfi --Related-- IMF, Oct 2022: https://lnkd.in/dXsTSSgn IMF, Oct 2023 (see page 16): https://lnkd.in/dUjADA5V #climatejustice #climatediplomacy #climatefinance #IMF #WorldBank

We were invited to the G20 IMF/WB Sovereign Debt Roundtable to discuss how to address the twin crises of #debt and #climate. With Maia Colodenco we argued for the need of a Sustainable Financing Strategy for the Green Transition.  The twin challenge of debt and climate crises that developing economies are currently facing requires large-scale, up-front investments that allow countries to implement a well-designed climate action to boost economic growth. Focusing solely on ex-ante and ex-post debt instruments is not enough to overcome it.  Read our paper below 👇 : https://lnkd.in/dfKRB9e5 https://lnkd.in/dBw_wz9e

A great Tuesday morning! What a day! If you don’t know what " climate-sovereign debt doom loop" is, then this is a post for you! Not one country is on track for a 1.5C future based on 2030 national pledges for cutting emissions, according to the Assessing Sovereign Climate-related Opportunities and Risks Project. Climate risks increase the cost of debt, making debt servicing more difficult. At the same time, climate-related damages reduce fiscal space, making it difficult to secure debt financing for mitigation or adaptation policies to reduce climate risks. A doom loop emerges, with low-income countries particularly vulnerable.  What’s more, the review of 70 countries’ emissions and policies shows “no overwhelming trend” that wealthier countries are doing a better job of tackling climate change.  Investors largely agree that climate risks aren’t fully priced into markets, and academics are now studying what they’re calling the climate-sovereign debt doom loop to calculate the potential costs to countries. The 70 targeted for review make up 100% of the three main sovereign debt bond market indexes, according to the report.   The report’s authors concluded that more than 80% of wealthy countries aren’t contributing their proportional share of an annual $100 billion international climate finance goal, which was increased to $300 billion at the COP29 climate summit in Baku. Have a great debt doom loop Tuesday! https://lnkd.in/dZ7nrNRY

The current credit rating methodologies predominantly assess fiscal and economic risks based on conventional indicators like GDP, fiscal balance, and external debt. However, for SIDS, these models fail to capture the realities they face, particularly the impact of climate change. The recent analysis by the International Institute for Environment and Development (IIED) - Redefining credit ratings for Small Island Developing States, (available here: https://lnkd.in/g9agMkfm) explains that the growing climate vulnerability of SIDS is exacerbated by inaccessible, opaque and inappropriate credit rating processes, leading to higher borrowing costs and hampering the ability of SIDS to invest in resilience and sustainable development. This can widen the adaptation gap and prevent these countries from breaking out of the downward spiral of recurrent disasters that cause significant loss and damage and exacerbate debt burdens. As part of the preparation for the Fourth International Conference on Financing for Development (FfD4), a side event, "FfD4: Reforming credit ratings for climate resilience - A pathway to fair financing for SIDS and LDCs' will be held in New York on 28 October, from 1:15 pm to 2:30 pm, and this side event aims to address these challenges head-on by bringing together a diverse coalition of stakeholders to discuss innovative approaches to reforming the credit rating sector. The event will explore the need for a new credit rating mechanism that not only assesses economic and fiscal risks, but also explicitly recognizes opportunities for investments that enhance climate resilience and promote sustainable development. This is a hybrid event that includes both in-person participation at CR 8, UN Building, New York (only participants with official badge issued by the UN will be able to join), and online participation (meeting link will be sent to registered participants). A moderated panel discussion will include high-level representatives from SIDS, representatives from government, UN agencies, development banks, and the private sector, focusing on actionable recommendations for reform. Read more about the event and register at: https://lnkd.in/gcJzAY_W

Debt for Nature swaps/Debt for Climate ( Energy Transition also) swaps is now making strides. A financial Instrument that came to prominence back in 1990 per World Bank Documentation. Countries can take advantage of this by conserving their ecosystem. Brazil and some other countries are seizing this opportunity. #climatefinance #cleanenergy

Some of the world's poorest countries are spending a lot more on debt repayments than they're getting in climate finance. And it's getting worse. New figures from International Institute for Environment and Development (IIED) show that in 2022, the 58 countries in the analysis spent US$59 billion servicing their debts compared with the $28 billion they received in climate support. (It's worth pointing out that about half the climate finance is provided as loans, not grants). Every time these countries are hit by a climate disaster (think Hurricane Beryl tearing through the Caribbean, or devastating flooding in Bangladesh), they're forced further into debt, meaning they have less money to invest in climate resilient infrastructure. And many of these countries are the same ones who've done the least to contribute to climate change. This is why International Institute for Environment and Development (IIED) believes that debt/finance and climate are two issues that need to be dealt with together. Read more ⬇️