Summit For A New Financial Pact In France From 22-23 June 2023

Worsening climate change and increasing global warming and its impacts such as unlivable heat, heat waves, wet bulb temperatures, unprecedented rains and floods, frequent and intense storms and cyclones have left small island nations and developing countries – those on the climate frontlines. Countries in the Caribbean, Latin America, Africa and Asia need to get funds to have defences against global warming and put off debt payments when disasters strike.

One third of all developing countries and two thirds of low income countries are at high risk of debt distress, while facing these disasters. Climate Finance estimates that emerging markets and developing countries other than China will need to spend around $1 trillion per year by 2025, and around $2.4 trillion per year by 2030 (6.5% of GDP) on tackling climate change.

In such a scenario, building a new consensus for a more inclusive international financial system is the need of the hour. Hence Government of France is hosting a two day summit for a new financial pact from 22-23 June 2023.

The summit will be co-hosted by the Indian G20 presidency and will aim to “build a new contract with the East & west and initiate a dialogue on some of the most pressing global issue-climate and development challenges.

Emmanuel Macron, President of the French Republic: “We will take a major step, as we will start by establishing a new consensus. The fight against poverty, the decarbonization of our economy in order to achieve carbon neutrality by 2050, and the protection of biodiversity, are closely intertwined. We therefore need to agree together on the best means to address these challenges in the poor and emerging countries of the developing world, when it comes to the amount of investment, to comprehensive reform of infrastructure like the World Bank, the IMF, and public and private funds, and how to set a new process in motion.”

The summit builds on the recommendations of the Bridgetown agenda to reform the international financial system, proposed by Mia Mottley, the Prime Minister of Barbados, and will aim to initiate a dialogue on some of the most pressing global issues, including climate change, loss of biodiversity and related climate and development challenges.

The United Nations Secretary-General and the Prime Minister of Barbados joined forces under the Bridgetown Initiative to address the immediate needs of countries facing debt distress and liquidity challenges, proposing a large-scale SDG Stimulus package to invest in the Sustainable Development Goals (SDGs), while stressing the need for reform of the international financial architecture.

According to the 2023 Financing for Sustainable Development Report, 52 low- and middle-income developing economies are either in debt distress or at high risk of debt distress, accounting for more than 40% of the world’s poorest people.

According to UN Secretary-General António Guterres-“The international financial architecture is short-sighted, crisis-prone, and bears no relation to the economic reality of today,”

This summit will be a major moment when world leaders will aim to set a bold and inclusive vision and clear milestones to drive the reform of the international financial system ahead of the G20 meetings in September, the IMF and World Bank meetings in October and COP28 in December.

The world is running out of time to fix its international financial system that is broken, outdated, infested with short termism and downright unfair. Too many countries are being prevented from fighting the climate crisis and from creating decent opportunities for billions of people – their citizens. If countries cannot access the finance they need at rates they can afford, the world will lose the battle, not simply the countries. What is good for the North is good for the South, East and West! This is the best development strategy for the people of the developing world. This is the best development strategy for the planet

Several Heads of States from the Global South and Global North as well as heads of multilateral institutions and representatives of Governments are expected to be in attendance.

Mia Mottley, Prime Minister of Barbados: “The international community’s responses are currently fragmented, partial and insufficient. We therefore call for a fundamental overhaul of our approach. Together, we need to build a more responsive, fairer and more inclusive international financial system to fight inequalities, finance the climate transition, and bring us closer to achieving the Sustainable Development Goals.”

Laurence Tubiana, CEO of the European Climate Foundation: “Climate impacts and economic instability are intertwined, we must align our financial architecture with the Paris Agreement. This summit is a chance to champion a Paris Action Plan: a visionary roadmap for climate and biodiversity goals to uphold our financial stability and human security at the same time.”

Several world leaders, including leaders from small island nations and developing countries – those on the climate frontlines – have been calling for a complete overhaul of the international financial system. The plan would make it easier for countries in the Caribbean, Latin America, Africa and Asia to get funds to beef up defences against warming and put off debt payments when disasters strike.

The writer of this article is Dr. Seema Javed, an environmentalist & a communications professional in the field of climate and energy