Loans sought to deal with climate woes

Forty-four countries have applied for the International Monetary Fund's new resilience trust loans, but overall funding is far from enough to deal with climate disasters and other long-term shocks, making it urgent for the public and private sectors to commit more resources, according to IMF officials and panelists.

Speaking at a seminar on climate finance on Monday, IMF Managing Director Kristalina Georgieva said the demand is strong, as 44 countries have expressed interest in borrowing from its $40 billion Resilience and Sustainability Trust, or RST, since it went into operation a half-year ago.

The event, themed "Scaling Up Resilience and Sustainability Financing", was co-organized by the Bretton Woods Committee, the International Finance Forum, or IFF, and the Paulson Institute.

It brought together policymakers and practitioners to offer their perspectives on how climate considerations can be further embedded in public investment decisions, and private participation and financing be further leveraged to help make economies more sustainable.

Rwanda is the first African country approved by the IMF Executive Board in December to receive $319 million in funding from the RST, which will be used to build resilience to climate change and help to catalyze further financing.

It was followed by Barbados, Costa Rica, Bangladesh and Jamaica.

Georgieva said the RST fund is "modest in size", as putting the world on the net-zero emission trajectory and adapting to global warming requires trillions of dollars of investment.

Governments cannot mobilize it alone, and the financing gap is particularly large, especially in emerging and developing countries, where ways must be found to substantially scale up private finance.

Georgieva said that dealing with climate-related disasters is a "very difficult and yet critical" journey, one that would make the planet more resilient.

Following the IMF chief's speech, John Lipsky, vice-chair of the Bretton Woods Committee, and also a moderator of the discussion, noted that despite the urgency in the area of climate finance and climate mitigation, there seems to be a perennial risk as the more dramatic news of the day distracts the attention.

Uzziel Ndagijimana, minister of finance and economic planning of Rwanda, said that the old shocks, from COVID-19 to climate change, and the conflict in Ukraine are overlapping, constituting a major threat to macroeconomic stability and to populations.

Li Bo, IMF's deputy managing director, said the creation of the Resilience and Sustainable Facility a year ago showed that 190 members of the global lender have put climate at the "very top" of their agenda.

Urgent action needed

"The bad news is that we are falling short. We need trillions of dollars going into clean energy, going into green projects every year," he said. "What we are mobilizing right now is only a fraction of that. We need urgent action. We need unprecedented global cooperation."

Going forward, the IMF expects the RST to play a catalytic role, approaching climate financing from three perspectives: policy environment, capacity-building and financing arrangement.

Jin Liqun, president of the Asian Infrastructure Investment Bank, said that when people really believe climate change is a crisis, there shouldn't be a shortage of resources.

Jin said that when multilateral development banks work together, one of the most important impacts that they have on client members is that government will take climate change seriously, which will be a boost to regulatory policy improvement.

Lin Jianhai, vice-president of the IFF, who also attended the seminar at the IMF headquarters, said addressing climate change and sustainability challenges requires both short-term actions and consistent efforts at all levels.

"We do not only need to raise the awareness of this evolving crisis but also leverage resources from both public and private sectors, together with international financial institutions," Lin told China Daily on Tuesday.