Climate love
Image of Avinash Persaud

Avinash Persaud

Climate love

CALLING FOR CLIMATE FINANCING TO DEVELOPING COUNTRIES TO DEAL WITH EFFECTS OF CLIMATE CHANGE

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Barbados Prime Minister Mia Mottley's "Bridgetown Initiative" uses the IMF's Special Drawing Rights (SDRs) to attract private investment into LMIC transition projects at no cost to rich and poor nation taxpayers (see Inside the Institutions, What are SDRs?). Economic heft determines IMF SDRs. (i.e. their IMF quota share; see Observer Winter 2022; Autumn 2022). SDR buyers can borrow from IMF members at 2.7 percent using SDR currencies.
"Bridgetown" proposes a $500 billion Global Climate Mitigation Trust to store empty or new SDRs. (see Observer Summer 2022). The Trust lends SDR currencies to LMIC projects for shares. Lending to programs instead of governments distinguishes this IMF trust. These loans would become the Mitigation Trust's asset and the project's liability, effectively taking climate mitigation off LMICs' balance sheets and truly involving the private sector, which is crucial given LMICs' fiscal constraints and high capital costs. Proven technologies, high environmental, social, and governance standards, and expert investment managers would pre-qualify projects based on how much and how fast they reliably lower global warming.
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