World Bank, IMF & G20 in diagnostic mode as climate impacts accelerate and finance gap grows

As climate impacts worsen, the financial challenges facing developing countries are becoming increasingly severe. The recent annual meetings of the International Monetary Fund (IMF), World Bank, and G20 have highlighted the urgent need for financial reforms to address these issues. However, concrete solutions have been scarce, leaving many countries struggling with rising debt and limited fiscal space. With the upcoming COP29 summit, global leaders are urged to prioritize actionable support, including debt relief, increased climate finance, and equitable resource distribution. Jason Rosario Braganza, the Executive Director of the African Forum and Network on Debt and Development (AFRODAD), joined CNBC Africa to share his insights on the specific reforms needed to tackle these challenges. One of the key issues Braganza highlighted was the slow and ineffective nature of the current G20 Common Framework for debt relief. He pointed out that the process had been cumbersome, with African countries facing significant delays in finalizing restructuring programs. The exclusion of certain creditors, such as multilateral lenders, from the restructuring process further complicates the situation, creating a lack of transparency and coordination for borrowing countries. Braganza emphasized the need for a more comprehensive and progressive framework that incorporates debt cancellation for economic and climate-related crises, promotes debt transparency, and regulates credit rating agencies to prevent negative impacts on restructuring efforts. Looking ahead to COP29, Braganza outlined four critical actions that should emerge from the summit to support vulnerable countries. Firstly, he called for the fulfillment of the Paris Agreement's commitment to provide $100 billion in climate financing, urging developed countries to meet their obligations. Secondly, he emphasized the importance of ensuring that any new financial commitments made at COP29 do not worsen debt burdens for developing countries. Braganza advocated for a significant portion of climate finance to be grant-based to support those most at risk of climate shocks. Lastly, he stressed the need for transformative finance that goes beyond mitigation and adaptation, enabling countries to build sustainable buffers and revenue sources. In terms of mobilizing additional climate finance for developing countries, Braganza highlighted ongoing efforts to replenish funds for concessional arms of financial institutions like the World Bank and the African Development Bank. He underscored the importance of leveraging resources from institutions like the BRICS New Development Bank to maximize financial support. Braganza also called for debt relief or cancellation to create fiscal space for investments in climate resilience and the energy transition. Discussing the role of the IMF in responding to climate challenges, Braganza noted the appointment of a third executive director from Sub-Saharan Africa, signaling increased representation for the region. He emphasized the importance of engaging with African executive directors to advance the continent's agenda within these institutions. Looking beyond the U.S. elections, Braganza highlighted upcoming global forums where Africa is taking center stage in advocating for financial reforms and sustainable development initiatives. Transparency emerged as a key theme in Braganza's insights, underscoring the importance of open conversations and accountability mechanisms in distributing finance equitably. He called for robust tracking mechanisms and accountability structures at both global and national levels to ensure the fair and just distribution of financial resources. With citizens increasingly demanding transparency and accountability in resource allocation, Braganza emphasized the critical role of parliament, oversight committees, the media, and civil society in monitoring how funds are allocated and utilized. As global leaders prepare for COP29 and navigate the complex landscape of climate impacts and financial challenges, Braganza's insights shed light on the crucial reforms needed to support developing countries and address the growing urgency of the climate crisis.