Latest reports suggest that a group of 10 major economies are working to scale-up climate finance for developing countries by reforming how development banks spend money, beginning with the World Bank which is the largest.
Developing countries have already warned that they need affordable financing options to transition to clean energy and invest in resilience without being pushed into unsustainable levels of debt. But finance isn’t flowing to those that need it most.
Germany and the US handed a joint proposal for “a fundamental reform of the World Bank” to its management, during this week’s annual meetings in Washington DC on Tuesday.
Read also: Report shows Biden’s national security strategy focuses on climate change
Among other things, the proposals aim to make the bank fit to address global challenges, including climate action and biodiversity conservation. The proposed reforms were backed by 10 countries, including all of the G7 group.
In his reaction to the development, development minister Svenja Schulze, who serves as Germany’s representative on the World Bank’s board of governors, said: “The World Bank’s current model…. is no longer appropriate in this time of global crises. Challenges and investment needs are so great that the model needs to be adjusted.”
Schulze said that the reforms should include climate lending on better terms” and “targeted budget support for governments which want to pursue policy reforms to make their economies climate neutral.
Recall that US secretary of the treasury, Janet Yellen said that multilateral development banks, including the World Bank, had to “evolve” to address global challenges such as climate change.
She was quoted as saying that the US, the bank’s largest shareholder and the group of reformers are calling for its management to develop “an evolution roadmap” by December.
Yellen further stated that the development banks should increase concessional funding, including grants, to support middle-income countries’ transition away from coal.
Story was adapted from Climate Home News
