V20 Finance Ministers Call for Concessional Capital and Debt Solutions to Achieve Development and Climate Goals

APRIL 16, 2024, WASHINGTON, DC: Ministers from the 68 climate-vulnerable developing countries that make up the Climate Vulnerable Forum (CVF) have called for major reforms of the international financial system to allow developing countries to access the finances needed for them to meet their ambitious climate goals.

Convening on the sidelines of the International Monetary Fund (IMF) and World Bank Spring Meetings in Washington, DC, the ministers and senior officials from the V20 stated in a communique that, “High levels of external sovereign debt and debt service across the V20 economies are crowding out the ability of governments to make the investments required to achieve their climate change and development goals.”

The V20 has a membership representing 68 economies and a population of 1.74 billion people while only accounting for four percent of global greenhouse gas emissions. V20 countries face substantial challenges, including a widening adaptation finance gap and high levels of external sovereign debt that are hampering their responses to the climate crisis.

A recent study estimates that V20 economies have lost USD 525 billion over the last two decades due to climate change impacts, translating to a 20 percent decrease in wealth.1 Moreover, external debt servicing across V20 economies is on the rise, hindering investments needed for climate action and development goals.

The V20 Finance Ministers reaffirmed their commitment to the Paris Agreement’s 1.5℃ target and called for urgent action to align Nationally Determined Contributions (NDCs) with this goal.

They emphasized the need for a fairer global financial system and proposed several measures to transform the international financial architecture.

Key recommendations in their communique include:

1. Voice and Participation of Climate Vulnerable Countries: Advocating for stronger representation in the global financial system and recognition of the V20 Finance Ministers as an official intergovernmental group in the Bretton Woods Institutions before the IMF and the World Bank Group Annual Meetings in October 2024.
2. Cost of Capital: Urging for increased access to concessional finance, especially for climate-vulnerable developing countries, and the creation of grant windows for adaptation and resilience.
3. Debt Exchanges for Fiscal Space: Calling for debt relief in exchange for investments in green initiatives and the normalization of climate-resilient debt clauses.
4. Climate Prosperity Plans: Mobilizing resources for climate-resilient, low-to-zero-carbon projects, with a focus on clean energy, adaptation, and green industrialization.
5. Shock-Absorbent Financial System: Urging for the replenishment of funds for catastrophe relief and the scaling up of resources for loss and damage.
6. Special Drawing Rights (SDRs) and the Resilience and Sustainability Trust (RST): Recommending the rechanneling of SDRs to support climate-vulnerable countries and the expansion of concessional financing options.
7. Climate Finance and Protecting 1.5℃: Calling for unlocking multilateral funding increased Official Development Assistance (ODA)-related external flows and alignment of NDCs with the 1.5℃ target.

The V20 Finance Ministers also encouraged members of the international community to visit the new headquarters in Accra, Ghana. They also welcomed Barbados as the incoming and first Caribbean President of the CVF and V20 Finance Ministers under the leadership of H.E. Mia Mottley, Prime Minister of Barbados.

H.E Dr. Mohammed Amin Adam, Minister for Finance, Ghana, V20 Chair: “We are reminded of the critical juncture at which we stand today—an era defined by unprecedented climate challenges, yet buoyed by unparalleled opportunities for innovation, resilience, and collective action.  Our agenda spans critical areas of focus, including climate finance, access to clean, sustainable energy, and the imperative of integrating climate resilience into the fabric of our economic planning and policy-making. The urgency of our mission cannot be overstated. The disparities in climate finance, the gaps in technology transfer, and the hurdles in accessing sustainable energy are challenges that require immediate and concerted effort from all stakeholders. Together, we stand on the cusp of a new era: an era where resilience, sustainability, and equity – and climate prosperity – define our path forward.”

H.E. Mohamed Nasheed, CVF Secretary-General: “We are deeply indebted to the Republic of Ghana for enabling and financially supporting the establishment of the new CVF Headquarters in Accra. With our focus on growth and prosperity in the 68 CVF-V20 countries, the role of Finance Ministers and Finance Ministries is ever more critical. The responsibility of financial reengineering lies with ministries of finance. Big and bold decisions taken by finance ministries can usher our countries into lasting growth and prosperity.The CVF-V20’s Climate Prosperity Plans are a pragmatic approach to climate and development. I will focus my efforts on resource mobilisation through the Climate Prosperity Plans with supporting the creation of deal teams to prepare the projects and attract investment, debt solutions to support with creating fiscal space and carbon and biodiversity financing opportunities for new revenue streams that can augment financing needs of programs that course-correct us towards transformation.”

NOTES FOR EDITORS:

[1] V20 Ministerial Dialogue XII (April 2024): https://www.v-20.org/v20-ministerial-dialogue-xii-communique

[2] 2nd Debt Review (April 2024): https://www.v-20.org/resources/publications/v20-debt-review-2nd-edition

For the latest updates on the CVF and V20, please follow us on X at: @TheCVF, @V20Group

For media enquiries, please contact Paul Roberts at [email protected] or (WhatsApp +960 7654337)