The Vulnerable Twenty Group of Finance Ministers (V20) of the CVF, on Friday launched a coalition of developing countries to triangulate the multilateral system, private sector (including credit rating agencies) and philanthropies, for win-win solutions on climate, debt, and development.
Leaders from the 58 countries of the Climate Vulnerable Forum (CVF) –– including Ghana’s president and CVF chair, Nana Addo Dankwa Akufo-Addo, Barbados prime minister and summit co-host Mia Mottley, Kenya’s president William Ruto, and Colombia’s president Gustavo Petro –– representing developing countries, led the overwhelming call for the Summit for a New Global Financing Pact to deliver in not only reforming, but also transforming the international financial system towards debt sustainability and climate prosperity.
Building on the V20 roadmap for its Accra-Marrakech Agenda (A2M) launched April 2023, the statement of the ‘Emergency Coalition for Debt Sustainability and Climate Prosperity’ focuses on aligning the sovereign debt architecture with development and climate goals.
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This will require greater ambition and cooperation among the G20, the International Monetary Fund (IMF), the World Bank (WB), other global and regional development finance institutions, credit rating agencies, the private sector, and other stakeholders.
“From Accra and Bridgetown and now from Paris, the Climate Vulnerable Forum will keep working to not only make debt work for climate action, but also transform the international and development financial systems, secure a global deal on carbon financing, and revolutionize risk management throughout Nairobi and Marrakech and Dubai,” said Ghana’s president and CVF chair Nana Akufo-Addo.
He was referring to the Africa Climate Action Summit to be held in Kenya in September, the IMF and WBG annual meetings in Morocco in October, and the UN climate conference in the United Arab Emirates in December.
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“Debt distress and record highs in the cost of capital threaten to reverse development gains and jeopardize our ability to finance climate and development goals for the future. To avoid another lost decade of stalled restructurings and high debt service pressure, the global financial architecture needs to urgently evolve,” said Ghana’s finance minister and V20 chair Ken Ofori-Atta.
Ghana, Sri Lanka, and Colombia were among the 40 out of then-55 V20 countries that were in debt distress in the middle of last year.
The V20’s total debt stock is one-fifth of all developing country debt, according to the September 2022 debt review it co-published with the Boston University Global Development Policy Center.
“We hope other developing countries join the Emergency Coalition, and that the G20 and international financial institutions work with us through the Common Framework and the Global Sovereign Debt Roundtable, among other fora, so we can save ourselves from debt distress and worsening climate impacts,” Minister Ofori-Atta added.
The Emergency Coalition for Debt Sustainability and Climate Prosperity is led by the V20 and co-organized by a group of independent think-tanks and universities including the Finance for Development Lab; the Task Force on Climate, Development, and the IMF; and Debt Relief for Green and Inclusive Recovery.
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The V20 membership stands at 58 countries representing some 1.5 billion people from Afghanistan, Bangladesh, Barbados, Benin, Bhutan, Burkina Faso, Cambodia, Chad, Colombia, Comoros, Costa Rica, Côte d’Ivoire, the Democratic Republic of the Congo, Dominican Republic, Eswatini, Ethiopia, Fiji, The Gambia, Ghana, Grenada, Guatemala, Guinea, Guyana, Haiti, Honduras, Kenya, Kiribati, Kyrgyzstan, Lebanon, Liberia, Madagascar, Malawi, Maldives, Marshall Islands, Mongolia, Morocco, Nepal, Nicaragua, Niger, Palau, Palestine**, Papua New Guinea, Philippines, Rwanda, Saint Lucia, Samoa, Senegal, South Sudan, Sri Lanka, Sudan, Tanzania, Timor-Leste, Tunisia, Tuvalu, Uganda, Vanuatu, Viet Nam, and Yemen.