Dear Reader,
At COP29 in Baku and the G20 Summit in Rio de Janeiro, discussions on debt and climate finance were high on the agenda, but meaningful progress was limited. While leaders acknowledged the critical intersection of fiscal constraints and climate resilience, their actions lagged far behind public demands for concrete actions.
Ahead to COP, African leaders such as the Nigerian President Bola Tinubu warned that offering climate finance without addressing debt is like ‘pedaling harder on a bicycle as its tires go flat.’ Yemi Osinbajo, former Vice President of Nigeria, argued that developing nations cannot fund adaptation or mitigation efforts without meaningful debt relief.
Read this Op-Ed: Mark Sobel is US Chair of the Official Monetary and Financial Institutions Forum (OMFIF) and a veteran US Treasury official. He was at the forefront of international financial diplomacy for two decades. So it is all the more remarkable that he co-authored this Op-Ed with Kevin Gallagher, arguing for debt relief and critiquing the IMF view that indebted countries just need new liquidity to get over the hump. Read more here.
At COP29 a key outcome was the adoption of the New Collective Quantified Goal (NCQG). By 2035, industrialized countries are to raise at least $300 billion annually from private and public funds for developing countries. While this represents a step up from previous commitments, it falls far short of the $1 trillion economists estimate is needed annually.
However, the NCQG includes a broader roadmap—the ‘Baku to Belém Roadmap’—to mobilize $1.3 trillion annually by 2035 through a mix of public, private, and multilateral contributions. This roadmap is a silver lining, explicitly calling for increasing fiscal space and providing an opportunity to bring debt discussions into the central arena of climate finance ahead of the 2025 G20 Summit in Belém.
The G20 Summit in Rio that took place during COP29 echoed these concerns, but again, there was no major breakthrough on debt relief. While US President Biden called for faster debt restructuring, the G20 framework on debt still suffers from key shortcomings. However, the inclusion of wealth taxation in the G20 agenda marks a step toward a more equitable financial system.
Read our take on other outcomes of COP29 and the G20 Summit.
Warm regards,
The Debt Relief for a Green and Inclusive Recovery Team |