Al-Mashat: Inter'l Community Must Reconsider Global Financing Structure

As part of her participation in the meetings of the 78th session of the United Nations General Assembly in New York, Dr. Rania A. Al-Mashat, Minister of International Cooperation, participated in the Climate Policy Initiative (CPI) Advisory Council meeting, which was held to discuss enhancing sustainable financing in developing countries, with the participation of the Capital Mobilization Steering Group.

 The meeting was hosted by the Energy, Environment and Water Council, where the Minister delivered the closing speech, reviewing the challenges facing climate financing in countries undergoing economic transformation, as well as the available opportunities.

The opening speech of the conference was delivered by Ms. Barbara Buchner, Global Managing Director of the CPI, and Dr. Arunabha Ghosh, CEO of the Energy, Environment and Water Council. 

The session also included Dr. Mahmoud Mohieldin, UN Climate Change High-Level Champion for COP27, Ms. Rachel Kitty, member of the G20 Independent Expert Group on Strengthening Multilateral Development Banks, and other representatives of international institutions, climate action organizations and governments.

In her speech, the Minister spoke about the challenges the world is going through and their impact on developing countries and emerging economies, pointing to the state of global division as a result of the Russian-Ukrainian war, the tension in US-Chinese relations, and other global crises that exacerbated the challenges and caused a rise in energy and basic commodity prices, as well as challenges to supply chains and declining growth rates, pointing to the report of the United Nations Global Crisis Response Group, which indicated that more than 70 million people were affected by extreme poverty from 2019 to 2022 due to successive crises, in addition to about 180 million people who faced food crises in 2022.

The Minister of International Cooperation indicated that the successive crises around the world had a negative impact on the economies of developing and emerging countries, causing their revenues to decrease by about $95 billion annually during 2022-2024, according to the expectations of the Organization for Economic Cooperation and Development, and the financing gap for sustainable development goals rose to $4.3 trillion. Annually from 2020 to 2025, according to a report by the United Nations Trade Conference (UNCTAD) and the International Monetary Fund, which represents a 70% increase from pre-coronavirus pandemic levels.

Moreover, the Minister indicated that the successive crises around the world had a negative impact on the economies of developing and emerging countries, causing their revenues to decrease by about $95 billion annually during 2022-2024, according to the expectations of the Organization for Economic Cooperation and Development (OECD), and the financing gap for Sustainable Development Goals (SDGs) rose to $4.3 trillion annually from 2020 to 2025, according to a report by the United Nations Trade Conference (UNCTAD) and the International Monetary Fund (IMF), which represents a 70% increase from pre-pandemic levels.

Al-Mashat added that despite the unprecedented increase in concessional development financing in 2020, it was not sufficient to achieve the development goals of developing countries that were affected by the COVID-10 pandemic. H.E. also pointed to the climate change crisis, which is adding great burdens to the entire world, especially developing countries and emerging economies.

H.E. noted the huge financing needs identified by the committee on financing for the United Nations Framework Convention on Climate Change, which estimated climate financing needs for implementing nationally determined contributions are at about $5.9 trillion by 2030, noting that 60% of the needs included in those contributions have not been identified, especially given that the actual need for financing is much greater than that.

The Minister also stressed that the international community must generalize the principles of just financing, including to guarantee the right of developing countries to obtain just financing in quality and quantity, overcome challenges related to allocating financing to specific areas, increase funds directed to adaptation projects, and expand the use of the debt swap mechanism to enhance climate action to reduce burden, especially for developing countries and emerging economies. This includes the need to direct funding to climate projects that reduce emissions, promote the transition to a green economy, and stimulate infrastructure projects to withstand climate change.

H.E. stressed the importance of expanding the development of financing tools that enable various relevant entities to access new markets and reduce investment risks, including blended financing that stimulates the contribution of the private sector, as well as motivating philanthropic organizations to play a greater role in financing climate projects and mobilizing private investments. This is in addition to expanding concessional development financing, as well as increasing investment guarantees that reduce the risks of supporting mitigation or adaptation projects.

The Advisory Board of the CPI discussed the opportunities and challenges facing sustainable finance, the main initiatives for climate finance, and the roadmap for mobilizing capital and green investments, as they work to issue a series of reports supporting efforts to reform the international financial structure, with a focus on mobilizing capital and enhancing the innovative operating model of international financial institutions.