● The Minister of International Cooperation calls on international financial institutions to follow a more comprehensive approach to mobilizing private investments for emerging economies and developing countries.
● Al-Mashat: The international community must realistically address the decrease of the financial space in emerging and developing markets.
During the United Nations 78th session of the General Assembly (UNGA) meetings in New York, to strengthen relations with multilateral and bilateral development partners, Dr. Rania A. Al-Mashat, Minister of International Cooperation, participated in a high-level discussion session on “Private Capital Mobilizations in Emerging Markets and Developing Economies”, organized by the Glasgow Financial Alliance for Net Zero (GFANZ), the International Monetary Fund (IMF), the World Bank, and COP28.
This took place in the presence of Ms. Kristalina Georgieva, IMF Director, Mr. Ajay Banga, President of the World Bank Group, Mr. Sultan Al Jaber, President Designate of COP28, Mr. Mark Carney, GFANZ Chairman, and Mr. Mike Bloomberg, Chairman of Bloomberg Philanthropies, Dr. Mahmoud Mohieldin, climate pioneer for the Egyptian presidency of the COP27, and representatives of global investment banks and international institutions.
The session comes within the framework of international efforts to address investment risks and the high levels of external debt in emerging economies and developing countries, and their effects on development efforts, and to search for new methods of financing capable of curbing global crises to enhance sustainable financing for developing countries and emerging economies (EMDCs), to advance development efforts and reduce project risks, as well as to unleash climate finance in EMDCs to support the just, clean energy transition for climate action.
The Minister called on international financial institutions to follow a more comprehensive approach to mobilizing private investments in EMDCs, to pave the way for green transformation and climate action, explaining the need for the international community to realistically address the debt crisis and the contraction of the financial space of emerging markets.
Moreover, the Minister indicated that restructuring debt and alleviating its burdens should be an urgent priority to overcome development challenges and preserve the development gains achieved over the past decade, noting that the successive crises since the COVID-19 pandemic, and the food and energy crisis resulting from the Russian-Ukrainian war, have caused an increasing the debt burden in developing countries and eroding fiscal space.
Al-Mashat pointed to the report of the United Nations Global Crisis Response Group on Food, Energy and Finance issued in 2022, which revealed that 60% of the poorest countries in the world are already exposed to a debt crisis or at risk of one occurring in light of slow growth rates, high rates of inflation, and increasing interest rates. The Organization for Economic Cooperation and Development (OECD) estimates external debt in developing countries at about $375 billion for 2020-2025.
The Minister stressed that the current global economic conditions emphasize the need to reconsider the structure of international financing in the medium and long term to mobilize investments on a large scale, while maximizing the effectiveness and efficiency of the current climate financing system, and the need to expand innovative financing mechanisms that can play an effective role in alleviating the debt burden on EMDCs, as well as pointing out the importance of the debt swap mechanism to enhance development efforts and climate action.
Al-Mashat added that, based on the goals of the Paris Climate Agreement and the 2030 Sustainable Development Goals (SDGs), the “Sharm El-Sheikh Guidebook for Just Financing” has worked to reach a new perspective for a just, low-carbon transition that is in line with the development goals of EMDCs by presenting an implementable agenda for the relevant entities via innovative financing mechanisms and debt swaps for climate action, which Egypt has provided in a practical way through its country platform of the “NWFE” program, the nexus of water, food and energy projects, which includes 9 projects in the areas of mitigation and adaptation within the priority projects of the National Country Climate Strategy 2050.
H.E. explained that generalizing the principles of just financing guarantees developing countries access to obtain financing, in addition to providing financing for the areas of mitigation and adaptation to climate change, and ensuring the availability of financing flows at the heart of development plans, noting that the guide provides a flexible and implementable framework for climate action in EMDCs, especially in Africa. It also defines the role required of relevant entities to transform financial commitments into implementable projects and utilize opportunities to benefit from available financial resources.
Additionally, H.E. stated that accelerating climate action and bridging the financing gap requires mobilizing financial resources and investments from various relevant entities, and benefiting from private capital, as well as grants and development financing facilitated by multilateral development banks, as well as philanthropic organizations, explaining that allocating all financial resources available from multilateral development banks represents less than 4% of what is needed to confront climate change in the areas of mitigation and adaptation, according to the World Bank.