Paris summit sets stage for international cooperation on poverty and climate crisis

The Paris Summit for a Global Financial New Deal, scheduled for June 22-23, is set to provide a platform for world leaders to establish a "new consensus" that addresses interconnected challenges such as poverty, climate change and environmental protection, according to French President Emmanuel Macron.

The two-day summit, seen as a crucial precursor to upcoming economic and climate meetings, is intended to facilitate the exchange of ideas and proposals among participating nations.

One of the focal points of the summit will be the discussion of various proposals, including the taxation of shipping, fossil fuels and financial transactions. Innovative lending practices and revaluation of renowned institutions such as the International Monetary Fund (IMF) and the World Bank are also expected to be on the agenda.

Developing nations, which have suffered from broken promises regarding climate finance from richer countries, are demanding concrete progress. The V20 Group, which represents the 58 countries most affected by climate change, emphasizes the urgency of restructuring the global financial system in line with the ambitious climate goals set for 2030.

Sarah Jane Ahmed, V20's global director and financial advisor, stressed the importance of setting a clear timeline for these reforms, stating that any delay would lead to higher costs and require significant trade-offs.

Notable leaders from various countries including Kenya, Ghana and Barbados will attend the summit to advocate for financial reforms. The participation of representatives from China, the United States and the European Commission is also expected. The new director of the World Bank, Ajay Banga, will also join the meeting.

Economies around the world have faced multiple challenges in recent years, ranging from the ongoing COVID-19 pandemic and geopolitical tensions to inflation and weather-related disasters. UN chief Antonio Guterres describes the current situation as a test for the global financial system, which he believes has largely failed. He noted that 52 developing countries are currently in or close to a debt crisis.

The World Bank has proposed increasing its lending capacity to $50 billion over the course of a decade. In addition, the institution calls for significant reforms to redirect trillions of dollars of harmful subsidies towards climate and nature protection, particularly in sectors such as fossil fuels, agriculture and fisheries.

The urgent need to address climate change is further emphasized by the increasing risks it poses to nature, human societies, and the global economy.

According to a UN committee, developing countries (excluding China) will need to invest more than $2 trillion annually by 2030 to effectively address the climate and biodiversity crisis.

Delivering on existing promises, including the broken promise of $100 billion per year by 2020 to help developing countries reduce emissions and improve climate resilience, is a crucial expectation of the richest nations. One proposed solution is to increase the funds available, potentially using the International Monetary Fund's "special drawing rights" mechanism.

Emerging economies need a new credit strategy. Barbados suggests incorporating a calamity clause that would allow loan payments to be temporarily suspended for two years after a weather-related disaster or pandemic.

The scale of existing loans is another critical point of discussion at the summit, with a focus on China, a major lender to African countries. China's participation in the Common Framework for Debt Restructuring has been hesitant, raising concerns and highlighting the need for participation by all key stakeholders.

With the world still far from achieving its goal of limiting global warming to 1.5°C above pre-industrial levels, this summit serves as a crucial opportunity for leaders to collaborate and establish the tangible financial reforms needed for a sustainable future.

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