Rewire financial system to aid climate-hit nations: UN chief

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The world needs to rethink the international financial system to provide debt relief to countries battered by devastating and costly climate impacts like Pakistan, UN chief Antonio Guterres said Monday.

The catastrophic flooding that put a third of Pakistan under water this year displaced millions of people, swamped swathes of key farmland, and destroyed homes, roads and bridges.

“Pakistan deserves massive support directly from the international community,” Guterres said, at a packed meeting with Pakistani Prime Minister Shehbaz Sharif at the UN COP27 climate summit in Egypt.

But he said the world needs to go further and rewire how countries access finance, particularly from the multilateral development banks.

– ‘Billions to trillions’ –

Ratings agency Moody’s later downgraded its sovereign credit rating, saying the floods had exacerbated Pakistan’s liquidity and external credit weaknesses.

The UN chief called for arrangements in which the country could swap debt payments for investments in rehabilitation and recovery.

His calls echo those of Barbados Prime Minister Mia Mottley, who said Monday that the “world looks still too much like it did when it was part of an imperialistic empire”.

While wealthy nations can borrow at rates of between one to four percent, nations in the global south are saddled with rates of 14 percent, severely hampering the abilities of emerging economies to meet their climate goals, she noted. 

“The global south remains at the mercy of the global north on these issues,” she said. 

The Washington-based lender aims to mobilise $45 billion for a new facility funded by member governments, and to provide 20-year loans to about 140 low- and middle-income eligible nations.

Originally published as Rewire financial system to aid climate-hit nations: UN chief


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