Paris summit must rewrite the rules of finance
alliance statement on the summit for a new global financial pact
We welcome the Summit for a New Global Financial Pact, and its ambition to place climate finance at the top of the global agenda. We acknowledge and honor Barbadian Prime Minister Mia Mottley, whose Bridgetown Initiative was the inspiration for the summit.
However, for this summit to truly represent the global majority, it must offer a real sea change.
Nations in the global south need to be mobilizing $1 trillion annually in order to meet development goals and climate commitments - but lower income country debt payments are at their highest level for 25 years. In 2020, 64 countries spent more on debt servicing than they did on health.
Across the global south, the interest rate hikes of wealthy countries have precipitated a drop in reserves and caused local currencies to fall against the US dollar, making debt even more costly, and even harder to pay off. Debt burdens are currently the single greatest impediment to Low and Middle Income Countries (LMICs) reaching their climate targets, and they are a direct obstacle to building resilience and fulfilling the United Nations Sustainable Development Goals. Climate disasters will continue to strike with greater force and frequency, forcing LMICs to make trade-offs between servicing debt and saving lives.
Despite bearing minimal responsibility for historical carbon emissions, LMICs bear the brunt of its devastating impact, and are the least able to shield themselves from future impact. Flaws in the current climate finance system mean that 70% of all public climate finance is still in the form of loans. The climate finance currently committed does not include any money for loss and damage, the annual economic costs of which will run into several hundred billion by 2030 in the global south alone.
Finance needs to be mobilised immediately, but countries in the global South are constrained by a multilateral financial system which is weighted against them. Reform of this system is essential for a liveable future.
We call upon the leaders present at the Paris summit to lay the foundations for a global Green New Deal by supporting:
A new issuance of the International Monetary Fund’s (IMF) Special Drawing Rights (SDRs) for immediate global relief, at least equalling the $650bn released in response to the Covid-19 pandemic. Recycled SDRs channeled to lower income countries must: be additional to existing Overseas Development Assistance (ODA) and climate finance commitments; provide debt-free financing; not be tied to policy conditionality; be accessible to middle-income countries; and include transparency and accountability safeguards on both providers and recipients.
An end to unsustainable debt payments, including the elimination of IMF surcharges. This measure should include immediate interventions to increase fiscal space, as well as a coordinated institutional response for longer term solutions to the debt crisis.
Adequate grant-based funding for the Loss and Damage Fund set up at COP27. The sources of this funding should be based on the ‘polluter pays’ principle.
International tax justice, including the regulation of illicit financial flows, a financial transaction tax, an end to tax havens and profit-shifting, and a wealth tax on the very richest.
The urgent and long overdue reform of the international financial institutions so that they are democratically governed and accountable to the world’s people.
Statement signatories:
Rep. Rashida Tlaib, United States of America
Saber Chowdhury – MP, Bangladesh; Prime Minister's Special Envoy on Climate Change
Mercy Barends – MP, Indonesia; Chair, ASEAN Parliamentarians for Human Rights
Hon. Boma Goodhead – Member, House of Representatives, Federal Republic Of Nigeria
Hon. Dr. Frank Habineza – MP, Rwanda; President, Democratic Green Party of Rwanda
María José Pizarro Rodriguez – Senator, Colombia.
Caroline Lucas – MP, United Kingdom
Clive Lewis – MP, United Kingdom
Elizabeth May, O.C. - MP, Saanich–Gulf Islands, Canada; Leader of the Green Party of Canada
Esther Cuesta Santana – Ecuador
Charles Santiago – Chairman, National Water Services, Malaysia (Honorary member of the Alliance)
Image: R Boed. Licensed under the Creative Commons Attribution 2.0 Generic license.