Rockefeller Foundation calls for greater & urgent financial assistance to developing nations

19 countries spend more on interest repayment than education

Interview

Society

May 1, 2024

/ By / New Delhi

Rockefeller Foundation calls for greater & urgent financial assistance to developing nations

Eric Pelofsky have been talking about modifications to the callable capital

As an increasing number of developing nations face the risk of debt-trap, Rockefeller Foundation has called for urgent and greater financial assistance for these countries, that also face the worst impact of climate change, Eric Pelofsky, Vice President, tells Media India Group in an interview.

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Nine years after Paris Agreement, how has issue of climate finance evolved? Is there more money on the table for the developing world?

I think since Paris there has been a considerable change, the problem is since Paris, there has also been a pandemic and the economic consequences of a pandemic and the Ukraine war, all of which have made life incredibly hard for developing countries and the debt crises that they face are very, very real. I was reading a UNCTAD report which said that 19 developing countries allocate more money to interest payments than their education budgets, and 45 countries allocate more to interest than their health budget that is astonishingly depressing.

Do the rich countries have the will to honour their financial commitments as per Paris Agreement?  

Mia Mottley, Prime Minister of Barbados and Eric Pelofsky, have collaborated on the pivotal Bridgetown Initiative together

Mia Mottley, Prime Minister of Barbados and Eric Pelofsky, have collaborated on the pivotal Bridgetown Initiative together

I think, unfortunately, in some cases, there is not a recognition that this is sort of existential crisis for some countries and so I think most of the people that we engage with are working towards not just change incremental change, but real change. The problem is that the scale of the real change is still not quite at the level that is needed. There is no doubt that people are being way more creative than they have been in many many years, but the scale of the problem is still not understood by all and hence they don’t take the measures or go all the way that is needed.For instance, the World Bank changed its equity to loan ratio by 1 pc and that immediately freed up another USD 40 billion that they could lend to the poor countries. But our feeling is that they ought to have changed the ratio by 2-3 pc, making available well over USD 100 billion in funding. We at Rockefeller have been talking about modifications to the callable capital for the multilateral financial institutions to beef up the funds available for lending. If the governments pay heed to our call, it could go a long way in making a lot of more finance available for lending to the developing countries.

Is climate finance figuring in discussions with adequate seriousness?

Rockefeller is talking about it all the time and I think the civil society is talking all the time. I think some governments are talking about it all the time, particularly with governments on the front lines, whether that is Brazil in its leadership role in the G20 presidency. Barbados is one of the front-line states. Ghana and Kenya are talking about it on behalf so we have seen some really remarkable leadership on the G-7 side or the OECD side. I think we have seen an acknowledgement that climate finance has to be much, much larger. But then it sort of sinks below the surface of the sea as we try to figure out actually how to do that and again, going back to the political will, I think you see goodwill and political will lining up the problem is it, and there is not always an acknowledgement of just how dramatic the change has to be.

Is this likely to continue this year as well with elections everywhere?

9 developing countries allocate more money to interest payments than their education budgets, and 45 countries allocate more to interest than their health budget

9 developing countries allocate more money to interest payments than their education budgets, and 45 countries allocate more to interest than their health budget

It is not, if you look at some of the decisions in order of development assistance you can feel the tide of elections reaching into budgets and just drafting people from the knowledge that we are all in this together. It is very hard when you are about to see the voters talk about people who are not in your country. It is just hard and it takes moral and political courage and I think we have some, but it is not always enough in the right places. But, you know, like I have seen not just in the US people standing up courageously and saying we can’t just act in our own country and assume that we stand behind walls that are tall enough to prevent the tide from coming over us but the political courage is not as prevalent as we need it to be.

So as a foundation, what is your role in this? 

We are doing a couple of things, and I am sad you are not here but I understand, obviously we are doing three or four things that I think stand out. One is we are trying to build a coalition of countries that believe in the same issues and to build a coalition that is not a just developing country group. We want a coalition that is developing and developed and so that is something that we work very carefully, very quietly to bring the other countries in a way that is closed door, candid, not rushed, but is meant to be an honest conversation about what needs to get done and so that will happen and then afterward, we will talk about it.

Why should climate finance be only a worry for governments or multilateral bodies? Why are large businesses not being asked to play their role? 

What I can tell you on the business side is we didn’t give you a lot of thought about how to mobilise private capital for sure and we have been working with something called the Industrial Leadership Network. It’s something that was started up on the G7 of the Canadians in 2018. It brought together the institutional investors primarily from Canada, but not just from Canada in order to have a conversation about how to be bolder in the way they invest in the developing world we are doing something during spring to try and get to the institutional investors to think new thoughts about how to invest in emerging markets and so we are testing something we are going to see if it works and if it does, we will know that we should do more. But we are very aware of the role that the private sector needs to play and we are trying to the persuade them. 

But why not make it mandatory?

I think that is a conversation that lots of people are having and I think we are trying on the other end of it in and I think people should be thinking about all aspects of it.

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