đ§ #26 "Unlocking the trillions" will not suffice: a new Grand Bargain is needed between North and South
Today we are excited to welcome back Sony Kapoor to the podcast, and weâre talking about the Bridgetown Initiative, a new plan - an exciting new plan - to overhaul the international financial system to unlock huge flows of finance to the global South for the energy transition.
Now disagreement between the North and the South on how to finance the latterâs exit from fossil fuels provides a useful lens on a wider problem about the geo-economics of todayâs world of multiple, intersecting crises.
Sony outlines the nuts and bolts of this new plan - championed by the Prime Minister of Barbados, Mia Mottley, to âunlock the trillionsâ for the global South. But, more importantly, he explains why this approach is far from sufficient.
He questions whether headline-grabbing news that focuses on big numbers instead of the quality of the finance, is the answer.
And raises the issue of which economic model the new engines of global growth - India and Indonesia - can follow in a world where we no longer have the carbon
budget to replicate Chinaâs carbon-intensive trajectory.
Now Sony has a plan for a new âgrand bargainâ between the North and the South for a new development model led by services and virtual delivery of services that respects global environmental boundaries. This is arguably one of the most important policy conversation of our times, so stay tuned.
What we talked about:
0:57 Stocktake after COP27
3:47 The loss and damage fund is for now an empty shell
5:31 Why the Bretton Woods system is well overdue for reform
8:01 Note that World Bank/IMF played big role in opening up of China in 1980s and liberalization of Indiaâs economy in 1990s
10:03 But today these bodies are not tackling the urgent debate about which economic model the new engines of global growth such as India should follow, as replicating Chinaâs carbon-intensive model is not an option
11:00 Climate change still doesnât feature in the IMF core function of macroeconomic surveillance. World Bank calls itself the worldâs bigggest climate finance lender, but this is only because it is the worldâs biggest lender.
12.19 Enter the Bridgetown Initiative: whatâs good about it
14.15 Why the ambition of Bridgetown falls short
16:43 Bridgetown - short term aspect seeks to reduce the outflow of money by extending the suspension of debt repayments agreed during peak of COVID crisis.
22.55 Medium-term - how Bridgetown proposes to allow lending up up to a trillion dollars of cheap money to developing countries
29.37 If climate risk is properly assessed and taken into account by markets and credit rating agencies, the poorest countries will see their already sub-par credit ratings go down several notches because they face many physical risks from extreme weather.
31.04 Why the quality of finance matters more than the quantity. Too many discussions about climate finance focus coming up with the largest headline number.
32.55 Sonyâs Grand Bargain, explained.
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