Developing and African countries provide climate action financing solutions through linking public budgets to development and climate issues
IDA provides a good financing climate action model through soft grants and loans with long-term repayment periods and low interest rates
Dr Mahmoud Mohieldin, UN Climate Change High Level Champion for Egypt and UN Special Envoy on Financing 2030 Sustainable Development Agenda, said that financing climate action in the developing countries – especially in Africa – should be fair and efficient.
His remarks came during his participation in a session about financing climate action on the second day of COP27 that takes place in Sharm El Sheikh, with the participation of many African ministers and representatives of international and regional organizations.
“In the time the world is suffering from the impacts of COVID-19 and the war in Ukraine, the developing countries are asked to pay the cost of the climate crisis despite the fact that they didn’t contribute to it, this makes financing climate action in the developing countries unfair considering the increasing of countries that suffer from debt destress according to IMF and the World Bank.” Mohieldin said.
Mohieldin noted that financing climate action in the developing countries is inefficient as the negotiating process between states and financing and investment entities takes too long time and this postpones the climate action in these countries, adding that the climate financing is insufficient as there is an annual 1.3$ trillion gap between the available and the required funds, beside the fact that many of the developed countries do not fulfill their pledges to finance climate action in the developing countries.
Mohieldin praised the efforts of the African and developing countries to provide and apply climate action financing solutions through linking public budgets to development and climate action, activating the innovative finance instruments and debt swaps for co-investing in environment and climate projects.
He referred to the good models of financing climate action through soft grants and loans including IDA model that allow long-term repayment periods and low interest rates, saying that despite of these models it is better that financing climate action does not depend on debt, and depend rather than that on establishing carbon markets, activate debt reduction mechanisms and debt swaps.
The participants in the session confirmed the importance of the immediate dealing with climate change impacts and addressing the resulting losses and damages, with the necessity of providing fair climate financing methods that aim to reduce debt in the developing countries, co-invest in climate projects, “debt for climate” swaps, and enhance equal investing in mitigation and adaptation measures.