Tag: Climate change

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No Time for Lost Decade

A Call by DRGR Co-author Kevin P. Gallagher, Boston University

Fallout from the COVID-19 pandemic and Russia’s war in Ukraine will require large scale sovereign debt restructuring to prevent another lost decade of development for many emerging markets and developing countries; during the same ten years they urgently need to mobilize trillions of dollars to combat and adapt to climate change.

Just before the Russian invasion of Ukraine, the World Bank sounded the alarm that fiscal and monetary tightening in the advanced economies could lead to another sudden stop in capital flows to emerging markets and developing countries, followed by capital flight, exchange rate depreciation, and debt crises.

War only makes matters worse, as many emerging market and developing countries will suffer from skyrocketing oil, gas, and grain prices. Worse still, a default on Russia’s or Ukraine’s bonds could amplify that same cycle of depreciation and crisis.

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Provide Debt Relief for a Green and Inclusive Recovery

SOAS ICOP Policy Briefing and Podcast by DRGR-author Ulrich Volz

In line with recommendations for a green and inclusive recovery developed by an international team of economists, DRGR-author Ulrich Volz, Director of the Centre for Sustainable Finance at SOAS, urges the UK government, host of COP26, to propose urgently needed steps. Read more in the SOAS ICOP Policy Briefing or listen to the related 5-minute podcast.

Many developing countries, including Small Island Developing States, are suffering a triple crisis: debt, Covid-19, and climate change. UNDP estimates that close to US$1.1 trillion is due in debt service payments from developing and emerging countries in 2021 alone, and that 72 countries are at risk of external debt distress this year. Servicing this high debt undermines their ability to invest in climate adaptation despite an urgent need to scale-up investment in climate resilience.

There is a danger that vulnerable developing countries will enter a vicious circle: greater climate vulnerability raises the cost of debt, which further diminishes the fiscal space for investment in climate resilience, which further increases climate vulnerability and debt.

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V20 issues Statement on Debt Restructuring

V20 Statement on Debt Restructuring Option for Climate-Vulnerable Nations
STATEMENT BY THE V20 PRESIDENCY

The V20 Group are the finance ministers of the Climate Vulnerable Forum (CVF). The CVF encompasses 48 countries with 1.2bn people. Ahead of COP26, the V20 has issued a statement on Debt Restructuring that draws upon the proposal “Debt Relief for a Green and Inclusive Recovery (see our 3-minute video for a quick explanation).

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DRGR Ideas in the Media

Press Coverage on the Occasion of US President Biden’s Climate Summit

Prior to the virtual meeting of 40 world leaders around Earth Day, the concept of debt relief for a green and inclusive recovery played a prominent role in numerous articles. Still, the White House itself seems to have missed the opportunity to address it appropriately.

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DRGR’S Senior Advisor Moritz Kraemer at CNBC

Moritz Kraemer discusses climate-driven credit rating downgrades

Moritz Kraemer, Senior Advisor to the Debt Relief for a Green and Inclusive Recovery Project and contributor to our report, highlighted that “the vast majority of sovereigns will suffer from climate change in a way that their ratings will be cut.”

In his contribution, the Country Risk Chief Economist emphasized that, on the other hand, “climate policies that can successfully arrest global warming, would be, in the long term, a strong boost to sovereign creditworthiness.”

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New York Times Refers to DRGR in Comprehensive Article on Green Debt Relief

In the midst of the annual Spring Meetings of the International Monetary Fund and the World Bank Group, the NY Times published an article on the “systemic risk” debt and climate change pose on the world economy, quoting the DRGR proposal.

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The G20 Debt Plan Does Not Go Far Enough

The COVID-19 crisis has come at the worst possible time for humanity. The poorest countries were already struggling to meet their development goals in the face of cyclones, wildfires, and droughts, and the world now has only a decade left to slow down increases in global temperature and sea levels before they become catastrophic, and invest in climate-resilient development.

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Gordon Brown’s Keynote at the Launch of the Report

Gordon Brown by World Economic Forum is licensed under CC BY-NC-SA 2.0

Transcript of the video provided by Gordon Brown, United Nations Special Envoy for Global Education and former Prime Minister of the United Kingdom, for the launch of the report “Debt relief for a Green and Inclusive Recovery”

This conference today is of utmost importance, and in the month that we have found that we have an American president committed to net carbon zero by 2050 and a Chinese president committed to net carbon zero by 2060, this meeting is of great global significance as we fashion the new building blocks to take us there.

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