Event Summary
Financing the Future Roundtable: The Role of IFIs in Development and Climate Finance
Bretton Woods Committee
|
Thu, Jun 22, 2023
Body
As an affiliated event to the Summit for a New Global Financing Pact in Paris , BWC organized a roundtable discussion Financing the Future: The Role of IFIs in Development and Climate Finance. The roundtable featured a cross-section of participants from MDBs, private sector, and civil society and highlighted the work of BWC’s Climate and Energy Transition Finance and Multilateral Reform working groups.
Key themes that emerged were:
- Shifting the Narrative: It is crucial to move beyond the notion of tradeoffs between climate finance and poverty reduction and instead perceive them as complementary goals.
- Country-Specific Context: IFIs should consider not only the global perspective but also the specific conditions of individual countries when contextualizing projects within their national development plans.
- Expanding Bankable Projects: MDBs must enhance their efforts in expanding the pipeline of viable projects through effective coordination, project preparation, and increased investment in upstream policies.
- Proactive IFI Leadership: IFI management should play a proactive leadership role in recommending and incentivizing policy change, especially when consensus among shareholders is difficult or slow.
- Coordinated Roles: Coordinating the roles of MDBs is vital to ensure that each institution fills unique gaps in the financial ecosystem, avoiding redundancy or unhealthy competition.
- Enhanced Risk-Sharing: MDBs should further explore risk-sharing mitigation instruments with the private sector while being mindful of avoiding moral hazard.
BWC would very much like to thank the roundtable participants for their substantive contributions.
- Thierry Déau, Chairman & CEO, Meridiam
- Emily Slater, Executive Director, BWC
- Creon Butler, Director, Global Economy and Finance Programme, Chatham House
- Ayaan Adam, Senior Director and CEO, AFC Capital
- Erik Berglof, Chief Economist, Asian Infrastructure Investment Bank
- Susanna Gable, Deputy Director, Development Policy and Finance, Gates Foundation
- Jean-Xavier Hecker, Co-Head of ESG Research, JPMorgan
- Françoise Lombard, CEO, Proparco
- Yasmine Moezinia, Program Director, Climate Finance, Sequoia Climate Foundation
- Herman Mulder, Chair, Impact Economy Foundation
- Stephen Paduano, Research Director, London School of Economics
- Nandita Parshad, Managing Director, Sustainable Infrastructure Group, EBRD
- Jolie Schwarz, Senior Program Officer, Gates Foundation
- Veronica Scotti, Chairperson Public Sector Solutions, Swiss Re Management Ltd
- Ethiopis Tafara, Vice President and Chief Risk, Legal & Sustainability Officer, MIGA
- Patricia Torres Leandro, Head of Sustainable Finance Solutions, Bloomberg
- Yves Trevilly, Secretary General, SICPA SA
The Summit itself convened dozens of world leaders, policymakers, private sector and civil society with the goal of building a new contract between the Global North and Global South to deal with global crises more effectively.
The Chair Statement synthesizes the Summit discussions and concrete commitments announced.
A Summit Follow-up Roadmap was a key deliverable and outlines the international milestones over the next two years where progress on announced commitments and key policy actions presented at the Summit should be assessed and continued.
A Multilateral Development Banks Vision Statement was approved by a majority of the attending nations and emphasizes the need for MDBs to coordinate and work as a system while utilizing new tools and optimizing their use of concessional financing.
Key highlights included:
A $6.3 billion restructuring deal for Zambia
After protracted discussions, Zambia reached a breakthrough agreement on restructuring its debt with its official creditors (China being the largest) under the G20 Common Framework. Next step in the process is for Zambia to reach agreement on a debt treatment with its private creditors.
A $100 Billion SDR Announcement
IMF Managing Director Kristalina Georgieva and French President Emmanuel Macron announced that the G20 target of recycling $100 billion SDRs from advanced economies to vulnerable countries has been achieved. Some progress was made, but no hard commitments, on proposals to rechannel SDRs to the African Development Bank and other MDBs that could provide more concessional finance for developing economies.
World Bank Unveils Debt Pause Clauses & New Private Sector Investment Lab
New World Bank President Ajay Banga announced new debt “pause clause” measures that will allow vulnerable countries hit by natural disasters to pause repayments on their loans to the World Bank so they can have the fiscal space to rebuild after catastrophes. Additionally, the Word Bank launched the Private Sector Investment Lab to develop and rapidly scale solutions that address barriers preventing private sector investment in renewable energy in emerging markets.
Scaling Up MDB Financing
Leaders announced that they expect MDBs to collectively unlock $200 billion in additional firepower by taking on more risk and through balance sheet optimization measures (including many of the G20 CAF report recommendations). They also called for each dollar of MDB lending to be matched by at least one dollar of private finance, setting a hard target for private sector mobilization for the first time. There was also an acknowledgement for the first time that an injection of capital into the MDBs may be required by shareholders to meet the scale of the problem. There was not, however, full consensus on a MDB vision statement that would reconcile how the banks are going to deliver their core development mandate while simultaneously adding cross-border challenges.
A Just Energy Transition Partnership with Senegal
A fourth Just Energy Transition Partnership (JETP) was announced with Senegal (other partnerships include South Africa, Indonesia and Vietnam). JETPs are a nascent financing mechanism (pooling public, multilateral and private investors) that take a country-driven approach to helping coal-dependent emerging economies make a just energy transition.
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Financing the Future Roundtable: The Role of IFIs in Development and Climate Finance
Bretton Woods Committee | Thu, Jun 22, 2023
As an affiliated event to the Summit for a New Global Financing Pact in Paris , BWC organized a roundtable discussion Financing the Future: The Role of IFIs in Development and Climate Finance. The roundtable featured a cross-section of participants from MDBs, private sector, and civil society and highlighted the work of BWC’s Climate and Energy Transition Finance and Multilateral Reform working groups.
Key themes that emerged were:
- Shifting the Narrative: It is crucial to move beyond the notion of tradeoffs between climate finance and poverty reduction and instead perceive them as complementary goals.
- Country-Specific Context: IFIs should consider not only the global perspective but also the specific conditions of individual countries when contextualizing projects within their national development plans.
- Expanding Bankable Projects: MDBs must enhance their efforts in expanding the pipeline of viable projects through effective coordination, project preparation, and increased investment in upstream policies.
- Proactive IFI Leadership: IFI management should play a proactive leadership role in recommending and incentivizing policy change, especially when consensus among shareholders is difficult or slow.
- Coordinated Roles: Coordinating the roles of MDBs is vital to ensure that each institution fills unique gaps in the financial ecosystem, avoiding redundancy or unhealthy competition.
- Enhanced Risk-Sharing: MDBs should further explore risk-sharing mitigation instruments with the private sector while being mindful of avoiding moral hazard.
BWC would very much like to thank the roundtable participants for their substantive contributions.
- Thierry Déau, Chairman & CEO, Meridiam
- Emily Slater, Executive Director, BWC
- Creon Butler, Director, Global Economy and Finance Programme, Chatham House
- Ayaan Adam, Senior Director and CEO, AFC Capital
- Erik Berglof, Chief Economist, Asian Infrastructure Investment Bank
- Susanna Gable, Deputy Director, Development Policy and Finance, Gates Foundation
- Jean-Xavier Hecker, Co-Head of ESG Research, JPMorgan
- Françoise Lombard, CEO, Proparco
- Yasmine Moezinia, Program Director, Climate Finance, Sequoia Climate Foundation
- Herman Mulder, Chair, Impact Economy Foundation
- Stephen Paduano, Research Director, London School of Economics
- Nandita Parshad, Managing Director, Sustainable Infrastructure Group, EBRD
- Jolie Schwarz, Senior Program Officer, Gates Foundation
- Veronica Scotti, Chairperson Public Sector Solutions, Swiss Re Management Ltd
- Ethiopis Tafara, Vice President and Chief Risk, Legal & Sustainability Officer, MIGA
- Patricia Torres Leandro, Head of Sustainable Finance Solutions, Bloomberg
- Yves Trevilly, Secretary General, SICPA SA
The Summit itself convened dozens of world leaders, policymakers, private sector and civil society with the goal of building a new contract between the Global North and Global South to deal with global crises more effectively.
The Chair Statement synthesizes the Summit discussions and concrete commitments announced.
A Summit Follow-up Roadmap was a key deliverable and outlines the international milestones over the next two years where progress on announced commitments and key policy actions presented at the Summit should be assessed and continued.
A Multilateral Development Banks Vision Statement was approved by a majority of the attending nations and emphasizes the need for MDBs to coordinate and work as a system while utilizing new tools and optimizing their use of concessional financing.
Key highlights included:
A $6.3 billion restructuring deal for Zambia
After protracted discussions, Zambia reached a breakthrough agreement on restructuring its debt with its official creditors (China being the largest) under the G20 Common Framework. Next step in the process is for Zambia to reach agreement on a debt treatment with its private creditors.
A $100 Billion SDR Announcement
IMF Managing Director Kristalina Georgieva and French President Emmanuel Macron announced that the G20 target of recycling $100 billion SDRs from advanced economies to vulnerable countries has been achieved. Some progress was made, but no hard commitments, on proposals to rechannel SDRs to the African Development Bank and other MDBs that could provide more concessional finance for developing economies.
World Bank Unveils Debt Pause Clauses & New Private Sector Investment Lab
New World Bank President Ajay Banga announced new debt “pause clause” measures that will allow vulnerable countries hit by natural disasters to pause repayments on their loans to the World Bank so they can have the fiscal space to rebuild after catastrophes. Additionally, the Word Bank launched the Private Sector Investment Lab to develop and rapidly scale solutions that address barriers preventing private sector investment in renewable energy in emerging markets.
Scaling Up MDB Financing
Leaders announced that they expect MDBs to collectively unlock $200 billion in additional firepower by taking on more risk and through balance sheet optimization measures (including many of the G20 CAF report recommendations). They also called for each dollar of MDB lending to be matched by at least one dollar of private finance, setting a hard target for private sector mobilization for the first time. There was also an acknowledgement for the first time that an injection of capital into the MDBs may be required by shareholders to meet the scale of the problem. There was not, however, full consensus on a MDB vision statement that would reconcile how the banks are going to deliver their core development mandate while simultaneously adding cross-border challenges.
A Just Energy Transition Partnership with Senegal
A fourth Just Energy Transition Partnership (JETP) was announced with Senegal (other partnerships include South Africa, Indonesia and Vietnam). JETPs are a nascent financing mechanism (pooling public, multilateral and private investors) that take a country-driven approach to helping coal-dependent emerging economies make a just energy transition.