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Wednesday, February 21, 2024

Politicians call for $500bn a year to avert climate disaster

Members of the Global Alliance for a Green New Deal including US Representatives Ilhan Omar and Rashida Tlaib, UK Green MP Caroline Lucas, and Brazilian Congresswoman Joenia Wapichana, along with MPs from Rwanda, Nigeria, Bangladesh and the Philippines and others have written to the International Monetary Fund (IMF) to urge the global body to take up Barbadian Prime Minister Mia Mottley’s proposal to scale up finance for carbon-cutting projects in the developing world.

Prime Minister of Barbados, Mia Mottley
Prime Minister of Barbados, Mia Mottley, delivering a speech to the World Leaders Summit at COP26 in Glasgow

Pointing out that national plans to tackle the climate crisis are of little use without the finance to back them in a speech to the World Leaders Summit at COP26, the Prime Minister of Barbados, Mia Mottley, called for the extension of $500 billion in Special Drawing Rights – the international equivalent of quantitative easing – each year for the next 20 years.

Now, as the IMF and the World Bank prepare for their Spring meetings in Washington DC, their first since the Barbadian Prime Minister made her proposal and hot on the heels of what may be the IPCC’s last warning to the world, the Global Alliance for a Green New Deal, a unique alliance of 27 parliamentarians from 22 nations from the United States to Nigeria, have called on the IMF to take up the Prime Minister of Barbados’ proposal.

“The world’s least developed countries need a massive boost in technical and financial support to achieve development and climate goals: expanding energy access, transitioning to renewable sources, protecting, and enhancing biodiversity, safeguarding and enhancing indigenous lands, creating decent, green jobs and building resilience against the impacts of the climate and nature crises already battering them. That is why we urge you, at this, your first meeting since the Prime Minister of Barbados first proposed the extension of significant volumes of SDRs in response to the climate and nature crises, to consider her proposal,” say the Alliance members in their letter to the IMF.

The letter comes just days after the IPCC’s Working Group III report made clear both the urgency with which the world must act if we are to keep within 1.5 degrees of global heating, and just how far financial flows fall short of the levels needed to achieve emissions-cutting goals across all sectors and regions.

“The IPCC couldn’t have been clearer; we have run out of last chance saloons and must act now to rapidly reduce emissions. The technologies to harness the abundant energy from wind, waves and sun that can keep us within 1.5C exist – what is lacking is the political will. Nations like the UK, that are disproportionately responsible for the crises we are living through must take a lead in rapidly ending fossil fuel use, but now is also the time for the IMF to show that it is fit for purpose.

“By cancelling unpayable debts, abolishing punitive surcharges and making the billions in low-cost finance available that low- and middle-income nations need, the IMF could help the world meet the greatest challenge of the twenty-first century,” said UK MP Caroline Lucas.

“Climate adaptation continues to be grossly underfunded. In addition, compared to advanced economies, post COVID19 the speed and duration of recovery in Least Developed Counties and Small Island Developing States will be much slower and longer. This facility is desperately needed to avert climate catastrophe,” added Bangladeshi MP, Saber Chowdhury.

“I am proud to work with global partners to call on the IMF to expand finance to low-and-middle income countries for climate adaptation,” US Representative, Ilhan Omar, said. “We are in a global climate crisis and need to ensure every country, especially the most vulnerable, has the technical and financial support to combat this existential threat to humanity. That’s why it’s imperative we act as a global community to counteract this devastation and create a liveable planet for all.”

If the IMF were to issue $500 billion in SDRs annually, that could provide the basis for financing national plans for the transition to abundant renewable energy at scale in low and middle-income nations by lowering the cost of borrowing to rates enjoyed by richer nations, incentivising carbon-cutting investments.

In addition to this new finance, the Alliance’s letter calls for:

  • The abolition of the IMF’s surcharge policy, which charges countries with substantial or longstanding debts to the IMF significant fees on top of their debt servicing costs; and
  • The urgent implementation of debt relief measures that benefit both low- and middle- income countries, particularly to make sure that any new resources are not directed to repay external creditors but are channelled into climate investments.

“In addition to a new genocide against Indigenous Peoples, who are exponentially impacted by the effects of climate change, this year alone Brazil has experienced floods that left well over 100,000 people displaced, injured, or dead. We are in a global crisis and, together we can choose to either sink or use the financial resources that exist to draft a plan that can save the planet,” said Brazilian Congresswoman, Joenia Wapichana. “The nations most in need of finance are those least responsible for the crises we face and are entitled to fair compensation.”

“A Green New Deal must begin with the restructuring of the multilateral system; our financial institutions must be fit to respond to the development needs of the Global South. If prosperity for a lucky few comes at the cost of the many, there can be no sustainable future. Rising global economic inequality is the greatest threat to a just transition,” added Ecuadorian MP, Esther Cuesta.

The IMF was formed almost 80 years ago to encourage international collaboration and reconstruction in the aftermath of the second world war. Now it faces what is arguably its greatest challenge since that moment: the international financial system must deliver now for those on the front line of the climate crisis, or it is not fit for purpose in the twenty first century. The Fund’s Spring meetings, running from April 18 to 24, 2022, will be a key test of that.

Ending their letter with a demand for a response within 15 days, the lawmakers urged the IMF to act, stating: “As a collaborative international community, we can only respond effectively to the climate and nature crises if we work together – recognising, as we do, that they are inextricably linked to intolerable levels of inequality within and between nations. Not only do we have a moral duty to support those nations least responsible for the interlinked climate and nature crises faced by humanity; we have a common, vested interest in supporting the transition to a habitable planet.”

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