Civil society experts and economists have said that governments of wealthy countries must pledge hundreds of billions more in overseas aid payments channelled through the World Bank to avert the worst effects of the climate crisis.
According to economic experts, the International Development Association fund, which is the World Bank’s arm that disburses loans and grants to poor countries, is worth about $93bn (£b75n) but that figure must be roughly tripled by 2030.
Governments are expected to discuss new aid pledges this week at the World Bank’s annual spring meetings in Washington DC. The World Bank, its fellow publicly funded development banks around the world and the International Monetary Fund are under pressure to show they can lead the world to the low-carbon transition needed.
Ajay Banga, who is the president of the World Bank, told journalists the climate crisis would be a priority. “The world is facing a set of intertwined challenges: the climate crisis, debt, food insecurity, pandemics, fragility, and there is clearly a need to accelerate access to clean air, water and energy,” he said.
“The [World Bank] needs a fit-for-purpose mission and vision, and that is to create a world free from poverty on a livable planet.”
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Work by the economists Nicholas Stern and Vera Songwe suggests $2.4tn a year is needed by 2030 to shift developing countries, excluding China, to a low-carbon economy.
About $1.4tn of that is expected to come through these countries’ investments and the remainder from publicly funded assistance from wealthy countries as well as private sector investment and given the scale of transformation needed, Simon Stiell, the UN’s top official on the climate crisis, said nothing less than a “quantum leap” on climate finance from the World Bank would be sufficient.
It is not yet clear that Banga’s overhaul will go that far. Rachel Kyte, a professor of climate policy at the Blavatnik School of Government, the University of Oxford, said: “What is the [World Bank] going to do, with the IMF, to focus on phasing out fossil fuel subsidies, effectively pricing carbon and expanding carbon markets?”
Kyte, a former top official at the World Bank, raised questions over the willingness of the bank to reform. “Does [Banga] have his team with him? Borrowers and partners aren’t sure that everyone is on board internally.”
The pace of action needed to speed up, Kyte said. “It’s a race against time – Banga’s reforms versus the still widespread perception that the transaction cost of dealing with the bank is still too high.”
Story was adapted from the Guardian.
