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Climate finance for developing countries rose to USD 78.9 billion in 2018

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Climate finance provided and mobilised by developed countries for developing countries totalled USD 78.9 billion in 2018, up 11% from 71.2 billion in 2017. The increase was driven by a rise in public climate finance, while private climate finance was flat, according to new figures from the OECD.

Climate Finance Provided and Mobilised by Developed Countries in 2013-18 is the OECD’s third assessment of progress towards the UNFCCC goal of mobilising USD 100 billion per year by 2020 to help developing countries tackle and adapt to climate change. This latest report deepens the analysis of aggregate figures by providing more insights on the characteristics and recipients of climate finance over the period studied.

The report finds that public climate finance from developed countries reached USD 62.2 billion in 2018. Bilateral public climate finance accounted for USD 32.7 billion, up by 21% on 2017, and multilateral public climate finance attributed to developed countries accounted for USD 29.6 billion, up by 8% on 2017. The level of private climate finance mobilised was virtually flat, at USD 14.6 billion in 2018, after USD 14.5 billion in 2017. Climate-related export credits remained small at USD 2.1 billion, accounting for less than 3% of total climate finance.

“Climate finance to developing countries continues to grow but in 2018 was still USD 20 billion short of the 2020 goal of mobilising USD 100 billion. Early 2019 data from the European Union and its member states, the largest provider taken collectively, indicate that bilateral public climate finance may have continued to increase last year,” said OECD Secretary-General Angel Gurría. “Donors need to urgently step up their efforts to support developing countries to respond to the immediate effects of the pandemic and to integrate climate actions into each country’s recovery from the COVID-19 crisis to drive sustainable, resilient and inclusive economic growth.”

The report shows that out of the overall climate finance in 2018, 70% went to climate change mitigation activities, 21% went to adaptation and the remainder to crosscutting activities. More than half of total climate finance targeted economic infrastructure – mostly energy and transport – with most of the remainder going to agriculture and social infrastructure, notably water and sanitation.

Over 2016-18, Asia benefited from the largest share of climate finance at 43%, followed by Africa (25%) and the Americas (17%). In terms of distribution by income group, 69% of climate finance went to middle-income countries, 8% went to low-income countries and 2% went to high-income countries, with the remaining 21% allocated at regional rather than country level.

In terms of public finance instruments, both loans and grants increased in absolute terms. The share of loans, however continued to rise, reaching 74% of the USD 62.2 billion public finance figure in 2018, up from 52% in 2013, while the share of grants decreased from 27% to 20%. The share of grants was higher to low-income countries, at 42%, while the share of loans was higher in middle-income countries, at 88%.

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Latin America and the Caribbean: missing the chance to invest in a sustainable recovery?

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A new platform showcasing real-time data from 33 countries in Latin America and the Caribbean has revealed that on environmentally sustainable post-COVID-19 spending, Latin America and the Caribbean lags behind the rest of the world: 0.5 per cent of total spending and 2.2 per cent of long-term recovery spending was environmentally friendly in 2020 compared to 2.8 per cent and 19.2 per cent globally.

The tool, which is based on the Global Recovery Observatory, an initiative led by the Oxford University Economic Recovery Project (OUERP), and supported by UNEP, the International Monetary Fund and GIZ through the Green Fiscal Policy Network (GFPN), reveals that only six of the region’s 33 countries dedicated more than 0.1 per cent of their GDP to recovery spending. A small number did allocate a significant proportion of their budgets to post-COVID-19 efforts, including Chile (14.9 per cent), Saint Kitts and Nevis (13.3 per cent), Saint Lucia (11.3 per cent), Bolivia (10.5 per cent) and Brazil (9.26 per cent).

The examination of over 1,100 policies shows that approximately 77 per cent of the region’s total spending of USD 318 billion was allocated to rescue measures addressing short-term threats and saving lives, while only 16.1 per cent has focused so far on long-term recovery plans to revitalize the economy, given the limited financial resources of many of the region’s countries. On average, Latin America and the Caribbean has allocated USD 490 per capita expenditure to post-COVID-19 recovery, compared to USD 650 in Emerging Markets and Developing Economies, and USD12,700 in advanced economies.

The region has been severely affected by COVID-19. Home to 8 per cent of the world’s population, Latin America and the Caribbean has reported some 29 per cent of deaths from the pandemic, while it is estimated that in 2020, the region had a GDP contraction of 7 per cent.

“I applaud the initiative of Latin American and Caribbean ministers to track their progress towards greener recoveries. Our Tracker shows that overall, the region’s green spending does not yet match the severity of the triple planetary crises of climate change, biodiversity loss and pollution,” said Piedad Martin, Acting Director of UNEP’s Regional Office for Latin America and the Caribbean. “In order to transition to more sustainable and inclusive economies, nations in the region must build from this good start of tracking to further align their development priorities with green recovery.”

To date, according to the Tracker, a higher proportion of the region’s recovery budget has been spent on unsustainable sectors (USD 7.4 billion) than on environmentally-sustainable initiatives (USD 1.5 billion). 74 per cent of environmentally-negative spending has been directed to fossil energy infrastructure, and 13 per cent to unsustainable port and airport infrastructure, which is expected to lead to an increase in carbon emissions.

“The situation of the region is dire, the response to the pandemic is leading us to an increase in debt, limiting our capacity to direct investments to environmental sustainability. Yet, placing climate action as the engine of recovery has never been as important. Our survival and the competitiveness of the region is at stake due to climate change,” said Costa Rica’s Minister of the Environment and Energy Andrea Meza, who will chair the XXIII meeting of the regional Forum of Ministers of the Environment in 2022. “I call on governments, the international community and the private sector to support Latin America and the Caribbean in responding to this crisis through investments that allow us to meet the Paris Agreement.”

High-impact chances for the region are numerous and require a mix of policy measures. Key opportunities await in sustainable energy, in particular non-conventional renewable energy and energy efficiency; investments in zero-emission transport –with a special focus on public transport—; investments in nature-based solutions to ensure adaptation in key sectors, such as agriculture, and urban centres, where most of the population lives.

“The region has reached an economic crossroads. Either governments continue to support the old, dying industries of the past or invest in sustainable industries which will drive future prosperity. The new economic opportunities for the region are monumental and wise leaders will embrace them,” said Brian O’Callaghan, lead researcher at the Oxford University Economic Recovery Project.

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Cities in Southern Uzbekistan to Improve Urban Infrastructure and Municipal Services

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Residents of cities located in two southern regions of Uzbekistan will benefit from improved urban infrastructure and municipal services, thanks to Additional Financing for the Medium-Size Cities Integrated Urban Development Project (MSCIUDP), approved today by the World Bank’s Board of Executive Directors. The project will be supported by a $100 million concessional credit. The International Development Association, the part of the World Bank Group, will provide it to the Government of Uzbekistan at a very low-interest rate and with a repayment period of 30 years.

This additional financing will expand the geographic scope of the ongoing project funded by the World Bank that has been implemented in Tashkent (Yangiyul and Pskent), Bukhara (Kagan) and Namangan (Chartak) regions since 2019.   

The new project activities will cover selected mid-sized cities in Kashkadarya and Surkhandarya regions of Uzbekistan. The final list of all project cities in this part of the country will be validated over the next 6 months, in consultation with the regional and municipal governments (hokimiyats), based on local needs and economic potential.

Medium-size cities participating in the project in Surkhandarya and Kashkadarya regions will benefit from an integrated and specifically designed program of investments that will include the following: improved and expanded water supply and sanitation networks; upgraded electricity infrastructure and street lights, as well as vehicular, pedestrian and multimodal accesses to public transportation; upgraded energy-efficient public buildings; reconstructed public spaces and parks, street networks and associated infrastructure; and restored objects of cultural heritage.

The majority of the cities covered by the project have untapped growth potential. Many are located along strategic transport corridors; some have prominent tourist attractions; and most are well-positioned to create a range of quality service jobs for the surrounding rural areas.

All investments under the project will follow the most contemporary green design principles and aim to achieve universal accessibility. About 4 million people, equivalent to about 70 percent of the combined population of both regions, are expected to, directly and indirectly, benefit from the improved urban infrastructures, municipal services, and job opportunities created thanks to the project. 

“Many countries have effectively used urbanization as a development engine, like in the case of China, South Korea and Thailand. To achieve this, Uzbekistan needs to catch up with the backlog of urban infrastructure and services and upgrade public spaces to make cities more attractive and productive,” said Marco Mantovanelli, World Bank Country Manager for Uzbekistan. “Medium-size cities are growing fast here and have the potential for generating entry-level service jobs for youth. The combination of investments in infrastructure and capacity building of regional and municipal ‘hokimiyats’ to effectively manage and maintain urban assets will transform cities into comfortable places to live, work and do business. We are glad to support the Government in achieving this important goal.”

To complement the investments, the project will also offer additional support to regional and municipal hokimiyats through providing equipment and training to improve management and maintenance of urban infrastructure and assets, as well as modern environmental practices and green approaches to urban management.

Additionally, the project will help the Government to continue implementing reforms critical for sustainable urban development, including administrative and budgetary reform that should transfer more powers and resources to hokimiyats, and urban planning reform that should help ensure cities grow in an orderly and sustainable manner. 

The Ministry of Investment and Foreign Trade of Uzbekistan will continue implementing project activities in all five regions in close coordination with hokimiyats of the participating medium-size cities and regions, as well as key line ministries and state agencies. 

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World Bank Supports Jordan’s Green, Resilient, and Inclusive Recovery

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The World Bank Group’s Board of Executive Directors approved on June 10, 2021 a US$500 million Program to catalyze public and private investment in Jordan for a green and inclusive recovery from the COVID-19 pandemic. The program is expected to help Jordan accelerate its recovery and create more jobs by capitalizing on the economy’s potential, especially its green growth opportunities, and to strengthen the Government’s accountability mechanisms for delivery. The Asian Infrastructure Investment Bank (AIIB) is also preparing an additional US$250 million in financing to support the Program.

The Inclusive, Transparent and Climate Responsive Investments Program-for-Results (PforR) is part of the US$1.1 billion recently announced by the World Bank Group (WBG) in combined loans and grant financing support from the WBG and international partners to support Jordan in responding to the pandemic and promoting an early, climate-resilient, and inclusive recovery.

Jordan is ready to embark on a climate-responsive recovery and a new growth trajectory. Climate risks due to water scarcity, rising temperatures, and extreme weather present new opportunities for Jordan to become more resource-efficient and more competitive. Investing in greening of infrastructure and services creates jobs and economic value. Jordan’s Nationally Determined Contributions (NDC) under the Paris Agreement on climate change provides a platform to identify opportunities that also benefit the society.

The Program also helps Jordan to include gender-informed assessments in investment design and policy formulation. This is important as less than 15% of Jordanian women in the country were in the labor force in 2019, one of the lowest rates in the world, marking an enormous untapped potential for the economy and society.

Jordan is ready to turn the corner on its investment environment and to develop a greener, more climate responsive and more efficient economy,” said Nasser Shraideh, Minister of Planning and International Cooperation of Jordan. “This program will help Jordan move in that direction and kickstart the post-pandemic economic recovery.”

Jordan has been one of the most active and pioneering countries in the region in ratifying and adopting international climate change initiatives, including the Paris Agreement,” said Saroj Kumar Jha, Mashreq Regional Director, World Bank Group. “Jordan can now capitalize on these efforts to become an attractive destination for green and climate-related investments.”

The Program supports the implementation of investment reforms that were initiated under the Five-Year Reform Matrix. These reforms (i) strengthen processes and systems to deliver well-targeted public investments, including Public-Private Partnerships (PPPs); and (ii) further improve the environment for private investment, including tourism. In both cases the program supports the greening of investment,” said Christos Kostopoulos, World Bank Lead Economist.

The Program will also promote inclusion and transparency in its implementation. The PforR includes enhanced public consultation processes and supports greater accessibility of data to deliver more citizen-informed and better results. The PforR will institutionalize public consultation in the preparation of large capital projects to ensure that public investment promotes social inclusion and caters to the needs of citizens, including marginalized people and those with disabilities. The public will also be consulted during implementation and ex-post evaluation.

Alongside the PforR, the World Bank will also be launching a Country Climate and Development Report (CCDR), a flagship analytic report, to support evidence-based policies and reforms to green the economy, create jobs, and attract private sector capital. Jordan will be one of the first countries globally to pilot the CCDR.

The Program-for-Results is a World Bank Group financing instrument that supports programs already included in the government budget. Importantly, it links the disbursement of funds directly to the achievement of specific agreed program results over the five-year program period. The targeted results are publicly disclosed upon project approval, and achievement of results during the course of program implementation is verified by the Jordan Audit Bureau and validated by the World Bank.

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