Delegates discuss climate investment

THE International Monetary Fund believes a holistic approach is needed to tackle debt issues and climate finance in the region because for many developing countries, including small island states, their debt capacity is already very limited.

IMF deputy general manager Dr Bo Li told a press conference following the IMF conference in Nadi that talking about climate meant also challenging the debt versus climate, “because we need a lot of climate investment”.

“So, how can we support the climate, and at the same time, deal with debt issues?

“Our approach is that we must take this from a holistic approach in terms of debt versus climate and there are several things we need to do if we want to scale up climate finance at the same time manage the debt property.”

The IMF executive suggested that forming part of this solution was the need for more equity investment.

He said there was a need to find more equity investors willing to “instead of lending, to put equity into climate projects”.

“So that way with equity, we can scale up. Without equity, it’s hard to scale up, because there is already a very tight borrowing limit on many developing countries,” he said.

“Another use of that could be considered to be debt for climate swap, or debt for nature swap, because through that kind of operation, we can, again, help developing countries create fiscal space and also reduce the debt burden.

“And finally, for countries with unsustainable debt, there is also the new international debt restructuring architecture, and in that process, there is a common framework under G20, and there was the global sovereign debt roundtable organised by IMF, World Bank, and G20 chair.”

Mr Li said there were a lot of pre-approach to deal with debt challenges, at the same time to make the necessary investment in climate.