● Despite global interest in debt swap programs for development, their scale remains low internationally

● Innovative financing mechanisms enhance long-term financial stability for developing countries and reduce economic burdens

● The launch of Egypt's first voluntary carbon trading and issuance market promotes green economic development

During her participation in the Hamburg Sustainability Conference, held in Hamburg, Germany, H.E. Dr. Rania A. Al-Mashat, Minister of Planning, Economic Development, and International Cooperation, took part as a keynote speaker in two events: "Climate-Proof Debt Solutions to Enhance Resilience in Developing Economies" and "High-Integrity Carbon Markets Addressing Inequality," as part of ongoing international discussions on innovative climate action efforts.

Climate-Proof Debt Solutions to Enhance Resilience in Developing Economies

In the session on climate-proof debt solutions, H.E. Minister Al-Mashat emphasized the importance of finding innovative financing mechanisms to ensure long-term financial stability for developing countries, thereby alleviating their economic burden. The Sustainable Debt Swap Initiative, launched by the UN Economic and Social Commission for Western Asia (ESCWA), is one such innovative mechanism. This initiative provides an opportunity for debtor and creditor countries to cooperate in accelerating the implementation of sustainable development goals, achieving recovery, and enhancing development cooperation, thus enabling countries to achieve development and implement the Paris Climate Agreement.

H.E. Dr. Al-Mashat pointed out that the initiative aims to reduce financial pressures on developing and emerging economies and support them in implementing their development plans by lowering external debt payments and redirecting those funds into local investments for climate change mitigation, adaptation, and financing the implementation of sustainable development goals.

H.E. Minister Al-Mashat noted that, despite international interest in debt swaps for climate action and development, the scale of debt swap programs remains low globally and falls short of the aspirations of developing and emerging countries. She stressed the need for more innovative mechanisms, such as climate debt swaps, to address climate change and help developing countries ease their debt burdens while investing those funds in development projects combating climate change.

H.E. Dr. Al-Mashat also reviewed Egypt's efforts to achieve sustainable development goals, including the launch of Egypt Integrated National Financing Strategy (E-INFs) during the 79th United Nations General Assembly. She also mentioned debt swap programs for climate action implemented under the "NWFE" program with Germany, along with previous programs with Italy and the recently signed Memorandum of Understanding with China. 

H.E. Dr. Al-Mashat affirmed that Egypt's experience in debt swaps is based on a comprehensive approach and clear governance rules to maximize the benefits of these programs, achieve measurable results, and implement priority projects across various sectors.

The session featured Dr. Moritz Kraemer, Chief Economist and Head of Research at German LBBW Bank, Ms. Vera Songwe, Chair and Founder of the Liquidity and Sustainability Facility, Ms. Anneliese Dodds, UK Minister of State for Development, Foreign, Commonwealth and Development Office, and Mr. Ilan Goldfajn, President of the Inter-American Development Bank.

High-Integrity Carbon Markets Addressing Inequality

In a related session, H.E. Dr. Al-Mashat participated as a keynote speaker in a discussion on  "High-Integrity Carbon Markets Addressing Inequality" where she discussed the Egyptian government's launch of its first carbon registration, issuance, and trading market. This step is crucial in achieving economic and environmental sustainability and demonstrates Egypt's commitment to adopting innovative policies to mitigate the impacts of climate change.

H.E. Minister Al-Mashat explained that the launch of Egypt's first carbon market is the result of collaborative work and coordination with the World Bank, supported by the Development Policy Financing implemented by Egypt's Ministry of Planning and Economic Development in partnership with the World Bank. This initiative was launched through structural reforms and technical support for the Financial Regulatory Authority.

H.E. Dr. Al-Mashat emphasized that carbon markets are effective tools that encourage companies to reduce harmful emissions by providing tradable carbon credits to investors and companies struggling to lower their emissions. Trading carbon credits can reduce the cost of implementing Nationally Determined Contributions (NDCs) by more than half, enhance the green economy’s contribution to GDP, increase green investments, and help meet targets across various aspects of the green economy. Moreover, carbon markets provide an effective means of securing financing for the green transition.

H.E.Minister Al-Mashat also highlighted key elements necessary for the success of carbon markets, including transparency, real climate mitigation, and tangible benefits, especially for developing countries. Carbon credits, functioning similarly to financial assets or securities, make the financial sector central, both as a financier and trader of carbon credits, in line with global efforts to ensure the financial integrity of carbon markets.

The session featured Dr. Jochen Flasbarth, State Secretary at the German Federal Ministry for Economic Cooperation and Development; Dr. Christiane Laibach, Member of the Executive Board at the German Development Bank (KfW); Dr. Arif Havas Oegroseno, Indonesian Ambassador to Germany; Heike Vesper, CEO of the World Wide Fund for Nature (WWF) in Germany; and Tim Christophersen, Vice President of Markets at Salesforce.