As we convened for the Commonwealth Finance Ministers Meeting (CFMM) in the city of Marrakesh, Morocco last week, the backdrop of the recent earthquake that claimed over 3,000 lives served as a poignant reminder of exogenous shocks that can devastate a country’s infrastructure and economy.
Morocco’s response to this crisis has been commendable, but it highlights the need for comprehensive disaster preparedness and recovery plans across the Commonwealth and the rest of the world. Earthquakes, climate-related disasters and the ongoing cost-of-living crisis are just a few of the external shocks that can have a crippling impact on the economies of our family of nations. It reminds us that even as we try to tackle issues like climate change and debt, we must also build resilience to cope with unforeseen disasters.
Meeting on the sidelines of the World Bank and International Monetary Fund (IMF) meetings on Oct. 11, our Commonwealth finance ministers discussed strategies for scaling up development finance and addressing debt vulnerabilities.
Our member countries are faced with multiple overlapping crises, of which the cost-of-living crisis, which has reverberated across the globe, is a key concern, hitting our developing members particularly hard.
Rising prices for essential goods and services, driven by factors including supply chain disruptions and energy costs, are straining already fragile economies. Food security and access to basic health care and education are at risk.
Weighing heavily on the minds of many of our finance ministers is the pressing concern of debt. The burden of debt, often exacerbated by the need for climate adaptation and recovery from disasters, threatens both economic stability and development progress. We cannot overlook the fact that some of our member countries are already in debt distress or at high risk of it.
The Commonwealth is spearheading a call for the reform of the global financial architecture, recognizing the urgency to address the development needs of countries grappling with debt distress and liquidity challenges. In our pursuit of scaling up development finance, we are championing the utilization of innovative financial instruments like debt-for-nature swaps.
These instruments offer a crucial lifeline by creating fiscal breathing space and liberating financial resources that can be harnessed to bolster resilience against the ravages of climate change. In essence, creditors extend debt relief in exchange for a government commitment to invest in climate-resilient projects. Some of the Commonwealth's small states, including Seychelles, Belize and Barbados, have already committed to debt-for-nature swap agreements.
The success stories of these nations should serve as an inspirational model for other Commonwealth countries to explore and embrace similar arrangements.
To limit temperature rise and reduce emissions, we must dramatically increase annual climate finance flows. The gap between the finance needed and what is available continues to widen. Several climate funds exist, including the Green Climate Fund, but more must be done to ensure efficient and inclusive disbursement of these funds.
Blended finance and new climate-related levies are other innovative solutions that can help mobilize resources for climate action and development. We are encouraging and supporting Commonwealth finance ministers to seize these opportunities to help fund their climate ambitions and build resilience in their countries.
In June, I met with global leaders at the Paris Summit with the goal of pushing the climate action agenda forward. During that summit, the IMF and the World Bank were encouraged to pursue the inclusion of climate vulnerability in debt sustainability analysis to reflect the positive impact of climate-related investments.
Our team of experts at the Commonwealth Secretariat is working to inform advocacy efforts on the inclusion of climate vulnerability in debt sustainability analysis. This inclusion would provide a more accurate assessment of a country's debt sustainability by factoring in its vulnerability to climate disasters while also encouraging green and low-carbon initiatives.
As we joined together in Marrakesh, yes, we faced numerous challenges, but we also possess the collective will and innovation to overcome them. We must learn from each other's successes and mistakes, and the Commonwealth Secretariat will continue to reinforce collaboration between members.
Our Commonwealth family must continue to champion resilience, advocate for equitable development finance and drive the reform of the global financial architecture. Together, we can build a more resilient, sustainable and prosperous future for all Commonwealth member states.
Patricia Scotland is secretary-general of the Commonwealth. She was born in Dominica and is the first woman to hold the post.
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