Scaling up intervention on debt, climate and nature

Scaling up intervention on debt, climate and nature

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  'A triple win:Managing debt, climate and nature in the pandemic recovery' Scaling up intervention on Debt, Climate and Nature Learning from Heavily Indebted Poor Countries (HIPC) Initiative
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  Global solution todeal with twin challenge: Debt and Climate 2 IMF/World Bank, 2020  Covid-19: impact on Debt and Climate  Emerging and developing countries’ debt already high before Covid-19  Pandemic worsened situation  Fiscal pressures & emergency spending squeezing out investment in climate change adaptation/mitigation  Debt Service Suspension Initiative (DSSI) helped but more needed  Growing call for more debt relief  Strong case for linking debt with – financing climate & nature programs  In developing a global initiative on debt and financing climate and nature projects: Is there anything we can learn from the Heavily Indebted Poor Countries (HIPC) Initiative? Reminder: Enhanced HIPC Initiative • Launched by WB/IMF: 1996 & updated in 1999 • Comprehensive framework to deal with debt burden of eligible countries • 39 countries eligible under Initiative • Somalia going through process
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  Towards scaled upinternational – Debt, Climate and Nature initiative Learning from the HIPC Initiative  Brought all concerned parties to work together – no piece-meal approach  Linked to macro framework, tracking reform, etc. – to eliminate debt overhang as impediment to economic growth  Coordinated effort of multilateral, bilateral – Paris Club and non-Paris Club members and commercial creditors  HIPC (MDRI) provided around US$99 billion in debt relief  Strengthened links between debt relief, poverty reduction and social policies  Increase in social spending funded by savings from debt relief – including for health and education • Comprehensive framework • Targeting different types of debt • Links to poverty reduction • Promoting local ownership  E.g.: Countries developing own Poverty Reduction Strategy Paper (PRSP) – bottom-up consultation, involving civil society participation • Criteria used to measure progress  Yes, conditionalities built-in, but countries formulated strategy indicating how to use funds saved from debt relief to reduce poverty  E.g.: Increased expenditure on social services was prominent among indicators of countries’ commitment to poverty reduction • Focus on debt management  Besides debt reduction, debt management strengthening was there as well
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  Mapping elements fromHIPC into New scaled-up Initiative in trying to support “greener” recovery post-Covid-19 4 Learning from HIPC Mapping into New Initiative – Debt, Climate & Nature  Comprehensive framework was and is still important  ”Scaling-up” requires getting all parties on board, buy-in from international community, political commitment (G20), buy-in from creditors, etc.  Process: learn from what worked; E.g.: ”flexibility” brought in  Trying to bring in different creditor groups & types of debt  Pilot may start with one type of debt / instrument  But initiative will aim at bringing in different types of debt – after assessing debt portfolio structure (evolved since HIPC)  From clear link to poverty reduction: focus now on Climate & Nature  SDGs – Several indicators linked to environment  Target scaled-up climate/nature programs in countries  E.g.: biodiversity, livelihoods, inclusiveness  Local ownership remains important  Focus on countres’ needs: local climate strategy will be driving force: Projects relevant for concerned country  Defining criteria to mesure performance  Use key Performance Indicators (KPI) of climate and nature activities – to track performance and impact  Debt relief and Debt management  Covers both debt reduction and active debt management  Debt for nature & climate swap; Climate-related products
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