Exclusive: Macron's global finance to-do list for June summit

The French government vows its June global financing summit will generate "ambitious decisions" on greater access to climate finance and debt relief for vulnerable nations struggling with collateral damage from war, pandemic, and natural disasters, according to a concept note seen by Devex. The two-pager calls for action on a range of politically sensitive topics that have bedeviled global leaders for years, from debt relief to climate finance to international tax arrangements. But four months out, the areas most ripe for progress are still being determined. The Summit for a new Global Financing Pact, slated for June 22-23 in Paris, was announced last year by French President Emmanuel Macron and is an attempt to promote an array of international financial reforms, including the so-called Bridgetown Agenda of the prime minister of Barbados, Mia Mottley. While policymakers’ focus is honed on October’s World Bank and International Monetary Fund annual meeting in Washington — especially with reform in the cards — organizers of the Paris event aspire “to ensure decisive action” of their own, the note states. A French official, speaking on condition of anonymity, said on Friday that the summit agenda is deliberately broad for now to encourage as many participants and contributions as possible, though it is likely to be further honed following the Spring Meetings of the World Bank and IMF in April. The Paris event is designed to help low-income countries respond to the multiple shocks of the COVID-19 pandemic, the impacts of the war in Ukraine, and “climate change acceleration,” according to the note. “As financial flows are shifting partly as a result of tightened monetary policies and expanded budget support to green investment in developed economies, there is a growing risk of economic divergence between those economies able to finance the massive investments needed to transition towards net-zero and the LMICs, increasingly exposed to capital outflows,” it says. Ahead of the summit, four working groups made up of national and international financial institutions, as well as private sector representatives and foundations, will meet regularly and report to a monthly high-level steering committee. All but one working group has already met, while the steering committee is likely to convene for the first time this month, the official said. The composition of the steering group is still being determined. The concept note lists potential members such as France, Barbados, India, Japan, United Arab Emirates, United States, China, the European Commission, Germany, United Kingdom, Brazil, Senegal, South Africa, the United Nations General Secretariat, IMF, World Bank, and the Organisation for Economic Cooperation and Development, or OECD. China is arguably the most important on the list, given its key role in debt relief discussions for African countries. However, for now, the extent of Beijing’s involvement is unclear. The four working groups are designed to “lay the ground for ambitious decisions by leaders” during the summit. The first group focuses on “Ensuring more fiscal space for the most affected countries” and seeks to rechannel special drawing rights to catalyze private investment, debt treatment, domestic resource mobilization, and multilateral development bank reform. The second, on “Financing the private sector in low-income economies” will look at de-risking tools, improving business conditions, and the Alliance for Entrepreneurship in Africa, launched in 2021. The third, on “Increasing investment in green infrastructures in emerging and developing markets” will consider how to generate more projects, the role of blended finance and export credit, and how to create project pipelines for asset managers and sovereign funds. And the fourth, on “Developing innovative solutions to provide additional resources in support of countries vulnerable to climate change” will touch on the “international tax agenda, impact financing, climate-resilient instruments, debt swaps and disaster-related suspension clauses in debt contracts, insurance schemes and other types of mechanisms.” Finally, a “group of high-level economists/experts will be tasked to work on innovative proposals on how to pool new sources of financing at the international level to cover the needs of the most vulnerable economies to adapt to climate change or to respond to the consequences of natural disasters”. Citing Pakistan’s recent floods, the French official noted that one potentially “huge reform,” for instance, would be for major creditors to agree to suspend debt repayments for countries undergoing climate shocks. “The challenges this summit aims to tackle are huge, and right now everything seems to be on the table,” Maé Kurkjian, the ONE campaign’s senior policy and advocacy manager in France, told Devex by email on Friday. “That’s actually a good thing, that will allow developing countries and co-chair countries, not only France, to shape the Summit’s agenda and make their priorities known. We need as many countries on board as we can to make this a real global initiative.” Kurkjian wrote that for ONE, “the summit will be a success if it comes out with the creation of a new source of sustainable financing to support the poorest countries through an innovative international taxation system, as well as a strong political commitment to free the funds of Multilateral Development Banks and to agree to deliver a functional debt workout mechanism.”