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Alone, rich countries cannot close the climate finance gap

State assistance and funding from developed country governments alone will not be enough to close the funding gap for climate change initiatives in developing countries, IMF chief Kristalina Georgieva told CNBC.

More private investment is needed to help developing countries meet their climate change goals, said the managing director of the International Monetary Fund.

“We will never close it if we rely on the generosity of rich countries because it is too big to be around. [sic] with public money,” Georgieva told CNBC during an interview at the COP27 climate change summit in Sharm el-Sheikh, Egypt.

“So the most important thing here and in the coming months is to work tirelessly to create opportunities for private investment in the developing world.”

The most vulnerable people and communities are paying the price. This is unacceptable.

António Guterres

UN Secretary General

On the eve of the summit UN calls for ‘increased funding and implementation of action’ to help vulnerable countries adapt to the climate emergency.

“Climate change is hitting after hitting humanity, as we saw in 2022,” said Inger Andersen, executive director of the United Nations Environment Programme, referring to the devastating floods in Pakistan.

Vulnerable and developing countries will need between $160 billion and $340 billion by the end of the decade to make climate change and up to $565 billion by 2050, the UN report says.

State assistance and funding from developed country governments alone is not enough to close the funding gap for climate change initiatives in developing countries.

Sean Gallup | News Getty Images | Getty Images

“By 2030, the need for adaptation in the developing world will skyrocket to $340 billion a year. Today, however, support for adaptation is less than one tenth of that amount,” said UN Secretary-General António Guterres.

“The most vulnerable people and communities are paying the price. This is unacceptable”.

Why developed countries must fight climate change

It is in the interest of advanced economies to help developing countries achieve their climate change goals, Georgieva said, citing stability as a key reason.

“If we allow climate shocks to devastate poor countries time after time, we are contributing to the instability that Europe feels very strongly, especially when migration flows increase,” she said.

According to Georgieva, stability in developing countries also ensures trade between developed and developing countries.

“If you want your economy to export to these countries, there must be prosperity and stability,” Georgieva said.

She added that supply chain disruptions caused by climate change could pose a greater risk than the pandemic.

IMF Managing Director: 2023 will be a very difficult year

More needs to be done to hold businesses in developed countries accountable for cutting emissions, the IMF chief said, and taxes and regulation are levers that many governments can use.

“We must recognize that we are far behind where we need to be to protect the well-being of our children. If you look at this decade – from 2020 to 2030 – we have to cut emissions somewhere between 25% and 50%, and emissions are still rising,” Georgieva added.


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