Finance Secretary Benjamin Diokno has called for reforms in climate finance to ensure climate justice, urging multilateral development banks (MDBs) to provide more favorable financing terms, especially in the face of rising interest rates and international borrowing costs that can strain government budgets.
Diokno made these remarks during the Group of Twenty-Four (G24) Ministerial Meeting, highlighting the risks posed by increasing interest rates to countries like the Philippines, which rely on the International Bank for Reconstruction and Development.
He emphasized the need for MDBs to offer low-interest rates to middle-income countries and encouraged discussions on measures to improve concessional finance.
Diokno also urged MDBs to increase support for climate change adaptation and mitigation programs, contributing to the significant investment required for a global transition to a low-carbon economy.
He acknowledged the challenges faced by MDBs in lending capacity due to efforts like the Covid-19 response and recovery, stressing the importance of enhancing their financing capabilities through measures like the G20 Capital Adequacy Framework recommendations.
Diokno cautioned against using hybrid capital due to high global interest rates and advocated innovative solutions such as guarantee facilities to enhance lending capacity without increasing borrowing costs for member countries.
In conclusion, he underlined the importance of better concessionality in climate finance as a crucial step toward climate justice.
The G24 Communiqué, conveying members’ positions on various key issues, was also approved, addressing reforms in MDB financial models, member country representation, debt distress, climate finance support, domestic resource mobilization, and the multilateral trade system.
