We can tackle Cli­mate Change and Na­tional Debt to­gether, says Com­mon­wealth

The Star (St. Lucia) - - LOCAL - By the Com­mon­wealth Deputy Sec­re­tary-Gen­eral Deo­dat Ma­haraj

For many Caribbean lead­ers, the long walk down a vil­lage road af­ter a vi­o­lent storm to wit­ness first-hand the dev­as­ta­tion to in­fra­struc­ture and to peo­ple’s lives is a stark re­al­ity they are forced to face al­most ev­ery year. Equally chal­leng­ing is find­ing re­sources from tight bud­gets to keep re­build­ing the same bridge, the same road, the same school; or wor­ry­ing about how to re­lo­cate en­tire com­mu­ni­ties that may dis­ap­pear un­der the steady rise of the seas.

The knock-on ef­fect for gov­ern­ments is bal­loon­ing lev­els of un­sus­tain­able debt which make it dif­fi­cult to deal with the im­pact of cli­mate change while con­tin­u­ing to meet the cost of health­care, education and the other ba­sic needs of their pop­u­la­tions. It means small states, some of which have a pub­lic debt to GDP ra­tio of over 100 per cent, are sim­ply un­able to in­vest in longterm so­lu­tions be­cause of the con­straints of debt ser­vic­ing.

In­ter­est groups in the Caribbean have made it clear that the re­cent cli­mate change agree­ment in Paris needs to move swiftly be­yond as­pi­ra­tion to de­ci­sive and ef­fec­tive ac­tion. De­spite am­bi­tious pledges, only lim­ited funds are flow­ing to the coun­tries that need the great­est help. Ac­cord­ing to Cli­mate Funds Up­date, just US$36 bil­lion has been pledged, less than US$20 bil­lion has been de­posited, and lit­tle more than US$4 bil­lion has ac­tu­ally been dis­bursed to cli­mate ac­tion im­ple­menters.

The Com­mon­wealth has al­ready launched a Cli­mate Fi­nance Ac­cess Hub to help coun­tries se­cure cli­mate fi­nanc­ing but it recog­nises that this alone is not enough. Its ex­perts have been ex­am­in­ing other in­no­va­tions to ad­dress both cli­mate change and crip­pling pub­lic debt faced by many Caribbean coun­tries.

The Com­mon­wealth’s new idea is an ini­tia­tive to swap na­tional debt for cli­mate change ac­tion. This Mul­ti­lat­eral Debt Swap for Cli­mate Ac­tion pro­posal will in­volve an agree­ment be­tween par­tic­i­pat­ing cli­mate fi­nance providers and debtor coun­tries to re­duce their pub­lic debt in ex­change for a com­mit­ment to use debt re­pay­ments to fi­nance lo­cal cli­mate change projects.

To achieve this the Com­mon­wealth sug­gests that providers grad­u­ally re­duce the value of small states’ debt by trans­fer­ring some of their cli­mate fi­nance pledges to the mul­ti­lat­eral in­sti­tu­tions owed. This ef­fec­tively writes off the bor­row­ers’ mul­ti­lat­eral debt while redi­rect­ing the debt re­pay­ments to fund cli­mate change projects. In­stead of re­pay­ing their cred­i­tors, gov­ern­ments of small states would be re­quired to pay into a lo­cal trust fund that will man­age, in­vest and dis­burse re­sources for pro­ject im­ple­men­ta­tion.

This ap­proach will not only sig­nif­i­cantly ramp up the funds avail­able to small states to ad­vance cli­mate change projects, it will also gen­er­ate jobs and boost the econ­omy. Gov­ern­ments will make for­eign ex­change sav­ings - given that their debt will be ef­fec­tively con­verted into do­mes­tic cur­rency. So it’s a win-win for small states and providers who will ben­e­fit from an en­hanced pace of cli­mate dis­burse­ments and a more ef­fec­tive de­liv­ery of funds to tackle cli­mate change.

The Com­mon­wealth’s pro­posal is for cli­mate fi­nance providers to de­cide the fre­quency of debt write-offs. The cost to providers will de­pend on the lev­els of their pledges and the to­tal out­stand­ing debt to be writ­ten off. The Com­mon­wealth es­ti­mates that cost to be min­i­mal, if one com­pares small states’ out­stand­ing debt pay­ments to the to­tal size of the cur­rent pledges by Com­mon­wealth providers alone.

The Com­mon­wealth’s Mul­ti­lat­eral Debt Swap for Cli­mate Ac­tion pro­posal has al­ready been en­dorsed by the United Na­tions Sec­re­tary Gen­eral. The idea is ex­pected to be at the cen­tre of dis­cus­sions at the up­com­ing Caribbean De­vel­op­ment Roundtable in St Kitts and Nevis in March 2016.

The Com­mon­wealth is ready to re­spond ur­gently to the twin threats of cli­mate change and un­sus­tain­able debt, and is con­vinced that in­no­va­tive fi­nanc­ing, with spe­cial at­ten­tion given to highly in­debted, vul­ner­a­ble coun­tries, is part of the so­lu­tion.

Com­mon­wealth Deputy Sec­re­tary-Gen­eral

Deo­dat Ma­haraj

Newspapers in English

Newspapers from Saint Lucia

© PressReader. All rights reserved.