Mohieldin: Blended Finance, Debt Reduction Necessary for Climate & Development Finance in Developing Countries

Mahmoud Mohieldin, UN Climate Change High Level Champion for Egypt and UN Special Envoy on Financing 2030 Sustainable Development Agenda, said that overcoming the challenges of climate and development finance in developing countries requires integrating public, private, domestic and external resources of finance, and activating debt reduction mechanisms in these countries.

This came during his participation in the Regional Forum for Latin America and the Caribbean (LAC), attended by finance ministers of the region countries.

Mohieldin noted that development action requires mobilizing $5.3 trillion annually until 2030, of which about $2.4 trillion is to finance climate action alone, $1.4 trillion of them must be provided through domestic finance resources, in addition to $300 billion comes from development finance institutions and about half a trillion dollars contributed by the private sector.

“This reflects the importance of blended finance, increasing PPPs and enhancing the role of MDBs by increasing their capital and adopting new and more efficient policies to finance development and climate action in low- and middle-income countries.” Mohieldin explained.

Mohieldin stated that catalyzing climate finance in developing countries requires new policies for concessional finance that include low interest rates and long-term repayment and grace periods, de-risking finances and investments by activating credit guarantee and credit enhancement mechanisms, improving the legislative and regulatory environment for business to allow the flow of funds and encourage private sector to participate more in climate activities, reducing debt of developing countries through debt swaps and special drawing rights, activating foreign exchange guarantee mechanisms, and supporting local institutions and projects in developing countries.

The climate champion stressed the importance of adopting a holistic approach that strongly links financing and implementing climate action with financing and implementing development action, explaining that mitigation and activities contained in Sharm El Sheikh Adaptation Agenda (SAA) directly contribute to the achievement of other SDGs.

Mohieldin highlighted the investable, bankable and implementable projects that resulted from the Five Regional Roundtables Initiative, which was launched last year by the Egyptian presidency of COP27 in cooperation with the United Nations Regional Economic Commissions and HLCs, and the UAE Presidency of COP28 participates in its second edition this year.

He said that these projects have succeeded in attracting the attention of investors and regional and international financial institutions, adding that work is underway to close the deals of a number of these projects before the start of COP28 in Dubai in the end of November.