What’s the News?

President of France has recently hosted a summit in Paris to discuss reform of the world’s multilateral finance institutions and the ‘Bridgetown Initiative’ due to climate change.

What Is the Bridgetown Initiative?

• The Bridgetown Initiative aims to overcome some of the main shortcomings of mobilizing climate finance for small island developing states (SIDS) like Barbados
• It was devised by a group led by Barbadian Prime Minister Mia Mottley and her climate finance envoy Avinash Persaud.
• The idea was first unveiled by Mottley at COP26 Glasglow further developed with the help of international academics and civil society during a gathering in July 2022 at Bridgetown, Barbados
• It is a set of core messages designed to reform the World Bank and the International Monetary Fund (IMF), institutions setup at the end of World War II and dominated by the US and Europe so the . world can better respond to current and future crises.

The key demands of the Bridgetown Initiative are:

Liquidity Support

• N. member states should fast-track the transfer of $100 billion in so-called ‘Special Drawing Rights’, a monetary reserve currency, to programmes that support climate resilience and subsidise lending to low-income countries.
• The International Monetary Fund should also immediately suspend surcharges – additional interest payments imposed on heavily indebted borrowing countries – for two to three years.
  It should also restore “enhanced access limits” established during the COVID pandemic for two emergency financial support instruments, the Rapid Credit Facility (RCF) and Rapid Financing Instruments.

Debt Sustainability

• G20 creditor countries should redesign their Common G20 creditor countries Framework for restructuring the debt of poor countries in default, notably by speeding up debt relief talks and allowing middle-income countries to access it.
• The IMF should encourage the restructuring of unsustainable in a way that is consistent across countries, and change the debt way it analyses the debt to incentivise investments that create future savings, such as those for climate adaptation.
• Public and private creditors should include disaster clauses in Public and private creditors should include disaster clauses lending deals to allow countries to divert debt payments to disaster relief; and refinance high-interest and short-term debt with credit guarantees and longer maturities.

Private Capital

• The IMF and multilateral development banks should offer $100 billion a year in currency risk guarantees to help drive private sector investment in projects that would help developing countries make the transition to a low-carbon economy.
• Connected to that, they should also expand their support to countries to , help them create a pipeline of investable projectsand make greater use of blended finance and other structures where public lenders take on more project risk.

Development Lending

• The G20 and other shareholders of the World Bank, IMF and development institutions should fully implement the 2022 recommendations of a panel of experts aimed at boosting lending by the multilateral development banks.
• They should commit an extra $100 billion a year in fresh capital to the various institutions and move the Special Drawing Rights capital to multilateral development banks, starting with the African Development Bank by September 2023.
• Increase the leveraging of the World Bank’s International Development Association, which provides concessional finance; fully fund its emergency support facility to $6 billion by end-2023 nd scale up the IDA’s funding to $279 billion.
• Raise the access limits to concessional finance through the Poverty Reduction and Growth Trust and the Resilience & Sustainability Trust.
• Assess funding eligibility in light of a country’s vulnerability and provide low-cost, 50-year loans to help them invest in areas including climate resilience, water security, pandemic preparedness and access to renewable energy.
• Simplify and harmonise the way countries can apply to access , and provide more support in the process. loans across the worldThe international financial institutions should also finance development plans that help protect shared resources.

Trading

•  Groups such as the World Trade Organisation and other major trading partners should work with governments to strengthen ensure they benefit supply chains to make them more resilient, countries that produce raw materials and protect the vulnerable.

Governance

• The governmental shareholders of International Financial Institutions should change the way they are structured and run – largely by richer nations in the Global North – to make them more “inclusive and equitable.

Barbados

• It is an , in island country in the Lesser Antilles of the West Indiesthe Caribbean region of the Americas, and the most easterly of the Caribbean Islands.
• Its capital and largest city is Bridgetown
• Its neighbours include Saint Lucia, to the north, Saint Vincent and the Grenadines, to the west, and Trinidad and Tobago to the south.
• It is a fairly flat island, but with Mount Hillaby rising via terraced tablelands to 336 metres. Barbados is surrounded by coral reefs