A top-level meeting in Paris next month will lay out a $100-billion plan to drive more money into climate and development finance in poorer countries by providing currency guarantees to investors, according to a document seen by Reuters.
It would see the IMF and other MDBs “cut the excessive macro-risk premia on developing countries with $100-billion per year of foreign exchange guarantees”, for financing in more volatile domestic currencies rather than the dollar or euro. By removing that risk for investors, it should significantly reduce the rates of interest the governments have to pay. For some it could even be the boost needed to regain access to global capital markets lost during the COVID pandemic.
The Paris summit, hosted by French President Emmanuel Macron on June 22-23, will be attended by a number of world leaders and representatives from flagship global institutions such as the IMF and United Nations.