PARIS: World leaders said on Friday that multilateral development banks, including World Bank, are likely to find $200 billion in extra firepower for poor countries by taking on more risk, a move that may need wealthy countries to inject more money.
Reuters reported that the world leaders expressed these remarks at a summit in Paris. They said an unpaid promise of $100 billion in climate finance for developing countries was now in sight.
Rich Countries Promise to Address Climate Change
“We expect an increase of $200 billion of MDBs’ lending volume over the next ten-year by optimizing their balance sheets and taking more risks,” the summit’s final statement said.
The statement added, “If these reforms are executed, multilateral development banks may need more money”.
However, US Treasury Secretary Janet Yellen said ahead of the summit that banks had to first squeeze out more lending themselves before the option of money increases was considered.
The final summit statement called for each dollar of lending by MDBs to be matched by at least one dollar of private finance, which analysts said should support international financial institutions to leverage more $100 billion of private money in developing economies.
These announcements mark a scaling up of the action from the banks in the fight against the challenge of climate change and set a direction for more changes ahead of their annual meetings. However, some activists of climate change were critical of the outcome.
Harjeet Singh, chief of global political strategy at Climate Action Network International said, “While the roadmap from the Paris Summit admits the resolve for substantial financial resources to boost climate action, it leans too deeply on private investments and assigns an outsized role to MDBs,”.
The statement said there was a “good likelihood” of finalizing this year a $100-billion climate finance promise to developing nations.
