Welcome to Zero. I'm Moscoboyd. A couple of weeks ago, we featured an interview with the Barbadian economist Avanash Pasord. He was on his way to a meeting in Paris hosted by France's President Emmanuel Macron and Barbados's Prime Minister me And Motley, with the goal of making the global financial system more relevant to climate change, biodiversity loss and inequality. That meeting took place last week and more than forty
world leaders gathered in Paris for the talks. Our regular host actuat Ratty was also there, and so for this bonus episode of the podcast, I'm catching up with him to get his takeaways. Actually, fast up, how's Paris?
It was actually fun because on June twenty first, there is, as I learned, feed the La music. It's the one day, the longest day of course in the Northern Hemisphere where all kinds of music is free. So there were huge cues outside venues where bands were playing, and pretty much every restaurant had hired a DJ, and it was a party. I just could not really party at the time.
Yes, because you were there for serious business, not the feed telemusic. You were there to attend what is the snappily titled summit for a new Global Financing Pact? What was that meeting trying to achieve?
In the grandest imagination of Macron and Motley, it was supposed to be a new pact between global North countries and global South countries.
Privately, I call this the how dare you Summit? How dare you? How dare you upset the order? How dare you step out of your crease?
The pact would aim to reform the institutions that are at the heart of making the connection work, which is the World Bank and the International Monetary Fund. Of course, it was a meeting of only about fifty world leaders, which is a lot, but not everybody, and these institutions will only be reformed when all countries vote to make that reform happen. These kinds of changes take a long time, and this was a show of force from Macron and Motley that finally these reforms may actually happen.
And before the meeting even started you said it was a kind of select bunch. It wasn't everyone but world leaders including French President Macron, Publicist Prime Minist of Mayor Motley. The US is President Biden, UK Preme Minister, that the RICISUNAC, Brazilian President Lula, they altogether released this joint letter which
was expressing support for the meeting. So was there a good mood going into it as you were there on the ground when you weren't celebrating the fed teal music, what was the feeling?
Yeah, there was. When the meeting started, there were speeches by many of the world leaders who were there, and they all seemed willing to want to make changes happen. And these changes are crucial because currently the energy transition is going to need about four trillion dollars of spending every year. Much of that spending is going to happen in developing countries, and today we are spending about a trillion a trillion and a half depending on how you count.
Most of that money is being spent in developed countries. So to be able to make that spending also happen in developing countries, you're going to need these institutions to really work. And these countries are meeting at a time
when there is a real serious problem with debt. Some fifty countries in the world are in debt distress, which is to say that the money that they've borrowed has to be repaid, and because interest rates have gone up, those repayments have gone up, and many of these countries don't actually have the money to be able to repay, and.
Many of them are in more debt because of things like the COVID nineteen pandemic.
The pandemic, but also because of climate impacts, where a lot of the damages that happen have to be paid for and that comes from government purses, at least initially. So you get this vicious cycle of debt and distress and debt and disaster, and you want to try and break that because it is in the interest of developed countries to make sure that these countries don't go bust.
And it was quite a kind of esteemed casting crew of people who attended the event. It wasn't just the forty World leaders or fifty world leaders. You also had
a United Nations Secretary General Guterrez. You had the COP twenty eight president who you've previously interviewed and wrote a big profile about Sultan Algebrat, people like Ajibanga, the new President of the World Bank, Crystallina Georgieva, the head of the IMF so yeah, pretty all star cast and crew of financiers and leaders in the space.
Yes, and also from the private sector. Larry Fink of Black Rock was there, but so were executives from City Bank and from AKSA, the insurance company, and from other development banks, not just the IMF and the World Bank, but the African Development Bank, the Asian Development Bank, the Asian Infrastructure Investment Bank alsold people with trillions of dollars under management, are trillions of dollars available to spend.
One of the moments I actually saw kind of doing the rounds on Twitter getting a bit viral, was Vanessa Act's moment of silence.
I would like to begin by asking all of us to hold a moment of silence for people around the world who are already suffering, starving, being displaced, dropping out of school due to the devastating impacts of the climate crisis.
That's what I was.
Vanessa NaKaT is a climate activist who we've had on the podcast before, and her speech, which was at the plenary at the open was a very interesting one. She wore a T shirt which said Divest Now, and she was sitting in front of Mohmed bin Salman, the man who controls the oil that comes out of Saudi Arabia, and so she had a moment of silence for the victims of climate disasters. But also she went on to say that investing in oil and gas is a problem
for the planet. So to have that kind of dialogue where climate activists could speak to financiers could speak to world leaders in a small area made for a very intimate setting.
So at the end of the two days, what actually came out of this meeting? Was it just talk and roundtables or was there a document that you might expect from a climate meeting.
It's not the first time that word leaders have met to try and talk about how to reform these institutions, and engeos coming into the meeting were quite cynical that this would be another talking shop, that people who want to portray that they want to change things will be saying those things. But people who really matter and have to change things, like the President of the US is
not showing up, So what could we really achieve? So right from the get go, Macro is very keen to have concrete announcements made at the summit and to have a clear roadmap for what to do. To follow up on the many things that are going to be talked about, and in those things they did deliver. There were a few announcements, some in the billions of dollars, some in the hundreds of millions of dollars that will make a difference.
And they laid out a clear roadmap of the next eighteen months of meetings which are both international or technical, where these discussions will be had and progressed.
Okay, so you said there's a few billion dollar, multiple billion dollar announcements, and you wrote a piece with our colleague Natasha White outlining some of the key takeaways from the conference. So what were your takeaways from it?
So the biggest number was one hundred billion in special Drawing rights. This is a type of fund that's available to members of the International Monetary Fund that they can draw on without actually adding to the debt burden. It's a technical thing, but really important when it comes to emergency use of money. And initially that money is only
available based on the size of your economy. But what develop countries have done in this new hundred billion in SDR, which is roughly worth about one hundred billion dollars, is allocated for the use of developing countries in case of emergencies and that is real money that can be available. That was the big headline grabbing number and that announcement came from Crystalline Georgia. But who's the IMF. This is
what we did. This SDRs were a sleeping beauty and actually Emmanuel McCrone was the first prince with the kiss.
And now this is my announcement.
We have reached one hundred billion on lending of SDRs. That was our target from twenty one. We have achieved that target.
When we had avannashpasod Onzia the other day, he was talking about his country, Barbados's use of natural disaster clauses and how that allowed the country to respond and actually manage when natural disasters happened. How much discussion did these
kind of ideas get. At the Paris meeting, there was a systematic approach from the new President of the World Bank, a Jay Bangor, who said that they've developed what he calls a catastrophe toolkit, and it makes sense to think of it as a toolkit because it is a series of solutions that under this new President of the World Bank, they're going to try and implement, starting with funding advanced warnings systems which would allow countries to minimize the impact
as it's going to come to their shores, but also providing insurance so that as soon as the impact happens that they are able to draw on some cash. Then there is the innovation that PERSO talked about, which is allowing for delay in debt repayments, so immediately money that you were supposed to pay to a bondholder would be put on hold and you would be able to get up to two years in relief so that that cash can be injected back into the economy to recover. And
a series of these steps will make a difference. Some of it is going to happen through this initiative that was launched at COP twenty seven called the Global Shield, which includes insurance and advanced warning systems but also emergency help of personnel. And so the Global Shield got a one hundred million euros worth of further boost and now the total sum that can be spent through it is
about two hundred and seventy million euros. So that sounds like another series of quite concrete outcomes from this meet. One of the main climate finance sticking points now and in the past. Is this hundred billion dollar figure that rich countries for a very long time have promised that they would give poor countries each year, and they were supposed to meet that commitment in twenty twenty, but that promise has gone on met. This whole conference was about
climate finance. Was the problem with one hundred billion dollars addressed? Yeah, it's a good question.
It's sort of the number that developing countries use as a way of pointing out the hypocrisy of developed countries wanting to do anything. The reality is, the total amount of money needed to tackle climate change is many multiples of that hundred billion dollars, but at least you need to meet that token amount, and mccron at the meeting said that he is confident, according to his experts, that
this year that number will be met. Now, the complaint from developing countries has been that, well, first you've not met it, even with the math you do, and actually the math you do is not correct, and so bloo.
Mcgnews was able to get Macron to answer whether developing countries will be convinced by the math this time around, and he said, I understand these concerns and we're going to order a concrete analysis, although we don't know when it's happening or whether that concrete analysis will be made public, but there seems to be call for accountability and maybe that will be met.
Okay, what happened to Persoad's big idea about currency d risking? He came to us and said, this is how I want to make sure that billions of dollars becomes trillions of dollars and we get private investors to invest in developing economies to make green projects happen. Did that make any progress at the meeting?
So you should definitely go back and listen to the Persa episode from two weeks ago for the detailed answer he gives around how to make it work. But in brief, if you think about that four trillion dollar figure, most of that money has to come from private capital. Now, private capital, much of it sits in developed countries, and would like to invest in these developing countries. But if they do so, they're going to make revenues in a
local currency. So you build a solar plant. The solar plant is generating money in South Africa and ran now you want that money coming back to you, But that would be probably in dollars, and so this currency exchange, which can be risky given the financial risk around emerging market currencies, is a bottleneck for investors to invest in
emerging economies. And person's idea was that a body that is funded by the IMF and the World Bank should come together and guarantee a currency exchange, at least partially so that investors feel more confident going into these countries. Now, at the end of the meeting, there were a series
of documents that were produced. Currency exchange made it into one of those documents, and that was the discussion will be moved on to September and IMF with World Bank and TCX, which is an already existing currency exchange mechanism, are going to start to pilot how this might work. So that's concrete progress if they're going to actually try
it out. Pristat's estimation is that if you make it work, you could unlock as much as one point five trillion dollars in private investments for climate solutions.
And he also discussed this idea of putting taxes on things like international shipping, and that was to help fund things like lost and damage and disaster recovery in places that being impacted by climate events. Did that feed into the discussions as well.
Macro actually brought it up many many times. He's very keen on putting taxes on shipping, aviation, or even international financial movement, and that would all even if small amounts, so say half a percent, point one percent or even one percent, would go a long way to bringing in billions and billions of dollars every year to fund loss and damage which would deal with climate impacts. So there was a lot of talk around that. But Macro was also very clear that any form of international tax all
countries to agree, and that's a very hard thing. So he wants to start early, and he's making headway at least with the shipping tax, where France has been trying to get as many countries to agree to back this tax, and he's got about twenty three countries on his side right now. And there will be an International Maritime Organization meeting happening next week where they will discuss the shipping tax.
And on this one, we do not want the North to pay for the South. We want all of us to pay, whether it is aviation tax, whether it is fuel tax, whether it is shipping tax, we want to.
Pay taking all together. How does this conference, this big financial meeting, build momentum towards COP twenty eight in November.
So a lot of the world leaders who were there, who talked about these ideas, know that it's going to take some time to make them come to fruition.
There's this really nice clip from me and Motley who said something along the line.
Nine months ago, no one was speaking about natural disaster clauses. Now we have people wanting to recognize the wisdom of it because countries do need to pause debt payments.
Yeah, and so you get to see these changes as they happen, but you're also realistic about how much time is going to take, and so creating deadlines to make these things happen is quite important, and copy events which come once a year are a good moment to make that happen. But the big thing for me, as somebody
attending the event was the show of force. There were fifty world leaders, Okay, not everybody, but twenty five African countries, nearly half the continent, Germany, France, China, Brazil, large economies that really want change to happen. On the very final day, they all sat in a semicircle with Macron at the heart of it, holding court, getting everybody's opinions, views, noting them down, and concluding with what is it that needs
to be done? That kind of discussion around one topic of climate finance or financial reform to deal with debt isn't something I've attended and it felt energizing. Now, how much comes off it is really dependent on the people attending and whether they can take it all the way.
ATCHA, thank you very much, Thank you, thank you for listening to Zero. If you found this explaining useful, please take a moment to rate and review the show on Apple Podcasts or Spotify. If you've not yet listened to it, you should definitely go back and listen to our episode with Avanashpressod to get more background on what we've talked about today. We've linked more reporting, including actat and Natasha's
article on the Paris meeting. In the show notes. Zero's producers me Oscar Boyd and our senior producer is Christine driscoll. Our theme music is composed by Wandery. You can get in touch with us at Zero Pod at Bloomberg dot Net. Special thanks to Natasha White and Carabindrim. We'll be back on Thursday.