Resources for Climate Action and Poor are Major Themes for Egypt Meetings

President Biden joins ninety heads of state in Sharm el-Sheikh, Egypt, for the COP27 climate summit beginning this weekend. UN analysis finds that current action commitments fall short of reaching global warming goals made during the 2015 UN Paris Agreement.

“This year we experienced record heat waves, floods and natural disasters. If we fail to take action to address climate change, we'll see increasingly worse impacts from the climate crisis,” stated Eric LeCompte, Executive Director of the religious development group Jubilee USA Network. “As world leaders gather in Africa, the continent most vulnerable to climate change, we see the impacts of the climate crisis on the poor and our global economy.”

The Organization for Economic Cooperation and Development reported that in 2020 annual climate aid from developed to developing countries was $17 billion short of progress towards a $100 billion target agreed back in 2009. At the UN summit, leaders negotiate a revised climate action funding target for beyond 2025. 

"More than half of developing countries spend a quarter of their budget on paying debt," noted LeCompte, a United Nations finance expert. "Debt relief is an important part of reaching climate action goals for countries."

At October IMF and World Bank meetings, climate action was a critical part of discussions on debt and lending. Global leaders began a process to reform development banks to lend more for global priorities such as climate. A new IMF process also began that uses donations from wealthy countries to support long-term, cheap loans to developing countries that can support climate action.

“The success of the climate summit is all about showing us the money,” shared LeCompte. "The bottom line is whether or not we can raise the financial contributions to address the climate crisis."

World Development Banks Meet for Third Annual Summit

World leaders and more than 450 development banks meet for two days on aligning loans with crisis recovery and tackling environmental challenges. The third yearly Finance in Common Summit takes place in Abidjan, Cote d’Ivoire, amidst a world economy facing multiple shocks and calls for increasing lending capacity for development banks.

“What distinguishes this third Finance in Common from the two previous ones, is that now there are proposals to push development banks to do more,” said Eric LeCompte, Executive Director of the religious development group Jubilee USA Network. “Development banks play an important role in crises. With the pandemic, Ukraine war, inflation, food prices and climate challenges, we will demand more of them.”

In July, a G20-established panel of experts proposed changes to the way banks determine loan risk, assess available capital, and communicate with credit rating agencies. Frannie Léautier, Senior Partner at SouthBridge Group and CEO of SouthBridge Investments, chaired the group, comprising fourteen experts from a variety of backgrounds. According to the panel, global development banks can lend hundreds of billions more to poor countries. G20 officials met on the proposals last week.

“The report shows a pathway to expand development bank lending dramatically,” noted LeCompte who tracks G20 policies.

Earlier this month, Treasury Secretary Janet Yellen called for multilateral development banks to devise new approaches to respond to global challenges.

“Development banks require reforms of their operations, practices and lending models in order to deal effectively with the current crises,” stated LeCompte.

African Catholic bishops and religious leaders met in Accra, Ghana, last month and asserted that development banks can use more capital to provide loans in times of crisis, but they lack the resources to meet 21st century challenges. In a letter to President Biden early last year, Jubilee USA Network and the US Conference of Catholic Bishops called for significantly increasing multilateral development banks lending volumes, through a mix of increasing and improving use of capital. A similar letter was sent with more than 200 religious groups echoing the need for boosting development bank capacity.

The G20 is working on processes for wealthy countries to disburse some of their pandemic emergency currency, or Special Drawing Rights to poor countries. The IMF created $650 billion in SDRs, to help countries respond to the pandemic, of which advanced economies received more than $400 billion. This month, the IMF initiated operations for a new lending window, the Resilience and Sustainability Trust, that will fund its loans with Special Drawing Rights aid that wealthy countries share.

The International Monetary Fund, World Bank, G20 and G7 conclude meetings this week focused on the global economy. The impacts of the pandemic, Ukraine war, inflation, developing country debt, food security and climate crisis are on the agenda.

"Ahead of the meetings, the IMF reported that the US and other large economies will see contractions and this impacts the entire global economy.

“Everyone is hurt by rising food and energy prices. The burden is greatest on the poor. 

"I'm concerned that some of the proposed solutions of austerity and higher interest rates will cause greater pain.

"As the dollar gets stronger, developing country debts become dangerously unsustainable."

Jubilee USA, IMF and World Bank Press Conference: Friday, October 14th, 2:15 PM, Community Park, outside of the IMF. Religious and development groups respond to the IMF and World Bank Meetings and International Monetary and Finance Committee (IMFC) outcomes. View the advisory here. Link to the online and in-person press registration here.

Find Jubilee USA's press release on the G20 meeting here.

Find Jubilee USA's October 14th and 15th interfaith vigil, press conference and teach-in details here.

Read Jubilee USA's press release on the World Economic Outlook and Global Financial Stability reports here.

Read Jubilee USA's press release on IMF chief Kristalina Georgieva's curtain-raiser speech here. 

Read Jubilee USA's press release on the IMF Food Shock Window here.

G20 Finance Ministers Struggle With Economic Slowdown, Global Recession and Highest Inflation in Forty Years

Continuing War, Pandemic, Inflation Drive Up Fears of Global Recession

As world leaders arrive for G7, G20, IMF and World Bank Meetings, the IMF downgraded economic growth to 2.7%. As the global economy grapples with the Ukraine war, pandemic, a food crisis and inflation, the IMF warns of recession in two reports.

"It seems likely that we are heading into a recession,” said Eric LeCompte, the Executive Director of the development organization Jubilee USA Network. "The US and other large economies will see contractions and this impacts the entire global economy.”

The released flagship IMF World Economic Outlook report considers that rising interest rates could trigger more debt crises in developing countries. 

"As the dollar gets stronger, developing country debts become dangerously unsustainable,” added LeCompte. "The war and rising interest rates are putting developing countries in an even more difficult situation."

In its Global Financial Stability Report, the IMF stated that the persistence of inflation is a challenge the world economy has not faced in decades.

"The combination of high inflation and recession deeply affects the poor,” stated LeCompte. "Some of the proposed solutions of austerity and higher interest rates will cause pain."

In a chapter devoted to climate finance, the report indicated that developing countries will need $300 billion a year just to adapt to the impacts of climate change, a figure that may grow larger by 2050.

"We need to protect our planet and we need to limit the economic losses posed by climate change," shared LeCompte.

On Wednesday, G7 and African finance ministers meet and on Thursday, G20 finance ministers. The IMF and World Bank main policymaking bodies meet on Friday.

Read the full World Economic Outlook Report here.

Read the full Global Financial Stability Report here.

Read Jubilee USA's statement on the IMF World Economic Outlook report here.

Read Jubilee USA's statement on the Global Financial Stability Report here.

Read Jubilee USA's press release on IMF chief Kristalina Georgieva's curtain-raiser speech here. 

Read Jubilee USA's press release on the IMF Food Shock Window here.

Find Jubilee USA's full list of this week's events here.

Find Jubilee USA's October 14th and 15th interfaith vigil, press conference and teach-in details here.

Unseen in Decades, Inflation Challenges Global Economy