New Global Financing Pact
Recently the Paris Finance Conference summit on “New Global Financial Pact” has been concluded.
Objectives of the Summit:
- Strengthening the system of providing finance to low-income countries in times of crisis and reducing their debt burden.
- Reforming financial institutions established after World War II and providing funds to deal with climate change.
Key announcements made in the summit:
- Arrangements will be made to provide an additional $200 billion in loans from Multi-Development Banks (MDBs) to emerging economies.
- The World Bank has announced disaster clauses related to loan agreements. Under these, loan repayment will be suspended in the event of extreme weather events.
- 100 billion dollar funding will be provided to poor countries through SDR (Special Drawing Rights). SDR is an international reserve asset of the International Monetary Fund (IMF).
- Reinvestment of SDRs from rich countries to poor countries has been proposed. With this, concessional finance will be made available to the developing countries.
- A new 2.5 billion Euro Just Energy Transition Partnership (JETP) agreement has been announced for Senegal. It aims to increase the share of renewable energy in the energy mix.
- There has been a spurt in bringing polluters under the tax net. Pollution tax is a tax levied on those persons who pollute the environment.
- A global expert review on debt, nature and climate was proposed. It has been proposed to assess the impact of debt on capacity in low- and middle-income countries.
- EU issues call to action on Paris aligned carbon markets. It aims to bring at least 60 per cent of global emissions within the ambit of carbon pricing mechanisms.
Source – Indian Express
