Paris Summit To Push For Global Debt And Climate Reform

World leaders gather in the French capital this week with ambitions to reimagine global financing for a new era shaped by climate change. The two-day Summit for a New Global Financial Pact will be more of a platform for ideas than a meeting where decisions are expected, with leaders laying the groundwork ahead of a series of economic and environmental gatherings later this year and next.

But the summit focuses on reforming lending mechanisms and tackling debt as many poorer countries struggle to meet urgent funding needs. In particular, they need help to speed up their transition to clean energy and strengthen resilience against climate disasters.

With trust in shorter supply after repeated broken promises over climate finance, emerging economies are eager for a breakthrough to help them cope with the twin crises and deliver on their climate-change targets. The summit will also seek to set the stage for a more equitable global architecture beyond the Bretton Woods system, pioneering ways to steer financial resources to address climate, biodiversity, and development challenges simultaneously.

But a new consensus will likely take time, especially with richer countries wary of committing to substantial changes that could cost them billions in lost revenue. And while France is leading the charge, there are few signs that other countries are willing to join it.

The summit will feature a range of talks and discussions on the future of multilateral development banks and the global financial architecture to build momentum for reform ahead of crucial meetings in 2023, including the G20 and SDG summits, the IMF and World Bank annual meetings and the climate summit known as COP28.

France’s President Emmanuel Macron has called for the summit to build “a new consensus” to meet the interlinked global targets of tackling poverty, curbing planet-heating emissions, and protecting nature. “To achieve those goals, we must also make sure that the financial sector contributes to the climate, biodiversity, and sustainable development agendas,” he said.

Many initiatives will be discussed, from a new multilateral financial institution to creating a climate-debt swap facility and a global green bond market. One idea championed by Barbados is a disaster clause so that loan repayments can be paused for two years in the event of a climate catastrophe or pandemic. The summit will also see renewed efforts to reform the IMF and the World Bank, with many developing countries calling for a more equitable balance of representation at the institutions.

Vox Weekly

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