by Leigh Thomas and John Irish

PARIS (Reuters) – Multilateral development banks will increase their financing capacity by $200 billion over the next ten years to support poor countries, world leaders gathered for the Summit for a new global financial pact announced on Friday. in Paris.

The summit, which since Thursday has brought together more than 40 international leaders in the French capital, highlighted the delay taken by the World Bank and the International Monetary Fund (IMF) to meet the challenges raised by climate change and the heavy indebtedness of the poor countries after the COVID-19 crisis.

“We expect an overall increase of $200 billion in the lending capacity of multilateral development banks over the next ten years by optimizing their balance sheets and taking on more risk,” said a final statement obtained by Reuters. .

“If these reforms are implemented, the multilateral development banks may need more capital,” the text adds, suggesting that rich countries may have to inject more liquidity.

The Paris summit, hosted by French President Emmanuel Macron, brought together some 20 African leaders, Chinese Prime Minister Li Qiang, and Brazilian President Lula to find solutions on issues ranging from debt relief to climate finance.

“Our goal is clear: a world where poverty is eliminated and the planet preserved; a world where vulnerable countries are better equipped to deal with the crises of climate change and conflict,” the leaders say in the statement.

REALLOCATION TO POOR COUNTRIES

Another announcement from the summit, an agreement to reallocate 100 billion dollars of special drawing rights (“Special Drawing Rights”) from the IMF – a monetary instrument intended to supplement the official reserves of the States – towards the poor countries, in particular African.

Of these 100 billion, “61 billion are with the IMF and work will continue in the coming months so that the remaining 39 billion, for which commitments have been made, arrive in the coffers”, Emmanuel Macron said on Friday.

The President of the Republic had indicated earlier that France was going to reallocate 40% of its special drawing rights.

Another advance, but qualified as “not satisfactory” by Emmanuel Macron himself, the objective of 100 billion dollars of financing for the climate which has a “strong chance” of being reached this year, according to the press release.

This commitment, made under the Paris Climate Agreement, is considered insufficient to truly help poor countries.

“On this, we have been much slower, much less effective than for the reallocation of special drawing rights and we all acknowledge that we are asking for much closer and operational monitoring of these 100 billion in climate financing”, admitted Emmanuel Macron.

ALWAYS DIFFERENCES

The summit communiqué also calls for every dollar of lending from development banks to be matched by at least one dollar of private financing, which analysts say should help international institutions mobilize $100 billion. additional private money every year in developing economies.

The announcements of the Paris summit thus highlight the intensification of the role of development banks in the fight against climate change, a measure criticized by certain environmental activists.

“While the Paris summit roadmap recognizes the urgency of substantial financial resources to support climate action, it relies too heavily on private investment and assigns an outsized role to multilateral development banks,” said Harjeet Singh. , Head of Global Policy Strategy at the International Climate Action Network.

Divergences also remain around the absorption of losses on the debt of emerging countries. China – the main creditor country of several African countries – is pushing for donors such as the World Bank or the IMF to absorb part of these losses, which Western institutions and countries oppose.

“China stands ready to participate in debt relief efforts in an effective, realistic and comprehensive manner, in accordance with the principle of equitable burden-sharing,” Li Qiang said on Friday.

At the summit, the United States and China, long at odds over how to approach debt restructuring for poor countries, adopted a more conciliatory tone. On Thursday, a deal was reached to restructure Zambia’s $6.3 billion in debt, mostly indebted to Beijing.

“As the two largest economies in the world, we have a responsibility to work together on global issues,” said US Treasury Secretary Janet Yellen, also present in Paris.

(Report by John Irish and Leigh Thomas, written by Zhifan Liu and Blandine Hénault, edited by Nicolas Delame)

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