V20 Ministerial Dialogue X Statement delivered by H.E Mohamed Nasheed, CVF Ambassador for Ambition, Maldives
V20 MINISTERIAL DIALOGUE X
16 April 2023
H.E Mohamed Nasheed, CVF Ambassador for Ambition, Republic of Maldives
Madame Georgieva from the IMF,
Ken from the V20,
Ladies and Gentlemen,
I speak to you today with a sense of great urgency. I am told to stick to my script. The debt and climate crises are colliding and producing an unprecedented situation of twin emergencies in the world’s most vulnerable developing countries.
But as Ken pointed out, I am Mohamed Nasheed, former president of the Maldives and current speaker of parliament, the People’s Majlis. But today, I represent the V20 group of ministers of 58 of the world’s most climate vulnerable countries, who collectively are more than 1.5 billion people, including some of the poorest in the world.
Before proceeding, as a co-founder of the Climate Vulnerable Forum/V20, I want to note two really critical things. First, having been part of our enterprise from the very beginning, it is crystal clear we’ve achieved so much. And while there is still a long way to go, it is clear to me that we are filling the role we set out to play when we were founded in 2009: to be a source of solutions, to catalyze bold partnerships, and to invest in hope. Because our ambition continues to grow in terms of transforming our economies to realize domestic prosperity, and to inject fairness and courage in global politics, today I could say that we are in a crucial moment in the evolution of our common enterprise. It is therefore clear that we must now establish an independent secretariat fully accountable to the V20 and CVF presidency, the troika and its national members. And I feel we should aim to conclude this process as soon as possible, perhaps in about six months.
As an independent intergovernmental group, representing 58 sovereign nations, we ask the World Bank and the IMF to extend official recognition to the V20 as an official constituency, given the V20’s unique experience and expertise representing the common priorities and interests of 58 of the world’s most climate-threatened developing economies.
Ladies and gentlemen,
I have come to this meeting to alert the world to the desperate situation we are in, and to ask for your full attention in addressing these twin emergencies. We can and must fix these emergencies together, because we will not be able to address them successfully if we do so separately.
As you will know, Sri Lanka and Ghana have already required attention due to the unsustainability of their debts. But these are the tips of the melting iceberg. We estimate that some forty V20 countries are in debt distress now, and that the total debt service payments for V20 countries by 2029 will be more than half a trillion dollars.
The unfairness of this situation is striking! The CVF’s recent Traffic Light report showed that all the V20’s NDCs are 1.5-compliant, due to our very low per capita emissions. On the other hand, the NDCs of high income countries only become 1.5-compliant if we accept entirely a grandfathering approach with unfair shares of the atmosphere.
Colleagues, when it comes to historical emissions, vulnerable countries are the creditors and rich high emitting nations are the debtors. They should be paying us for mounting costs of loss and damage and adaptation that their emissions are imposing on our livelihoods and economies every single day.
Instead, developed countries are telling us we in the V20 nations in debt distress owe the creditors $492 billion.
Ironically, this debt burden almost exactly parallels the half-trillion dollars in aggregate losses the V20 nations have experienced since 2000 due to climate damages, according to our latest Climate Vulnerable Economies Loss Report.
So, who owes who? They cause half a trillion in damages, and then tell us we owe them half a trillion. I know these are not exactly the same things, but surely the incredible inequity is glaring to any fair-minded person.
But I am not here to argue with you. As always, I am motivated to find positive and progressive ways forward. We can work together, because ultimately the twin emergencies of debt and climate affect us all.
Together, we must find a way to restructure these debts based on a recognition of unfairness of the current climate situation. The V20 continues to develop and share several recommendations on this – such as the Accra-Marrakech Agenda, and I put some of these to you, Madame Managing Director, directly in Sharm-el-Sheikh last year.
It saddens me greatly that we have seen very little action from the major players. So I repeat today, please we urgently need large-scale debt service relief, with an immediate partial debt suspension for all the debt distressed V20 nations, in order to make the investments our people need this decade.
This must bring all the creditors to the table, as the Common Framework has failed so far to accomplish. This would be encouraged by an approach swapping out old debt with a significant haircut for new bonds partially guaranteed by a new facility, which could be hosted at the World Bank, which we propose would cover 80% of principal payments and interest payments for 18 months.
We need to replace the case-by-case piecemeal approach suffered by Ghana, Sri Lanka and many others with a truly Common Framework in order to avoid a prolonged and a complex process where the debtor governments are disadvantaged, and their populations seriously harmed.
It is wrong to take a one-size-fits-all approach. Each nation has different circumstances, and this, alongside specific issues of climate-related risks and critical climate spending, will need to be recognised in the Debt Sustainability Analysis for each V20 member in order to make the case to make available climate finance.
Looking at restructuring, this must not be contingent on austerity. Doing so will only lead to a deadly cycle of reduced economic output leading to yet more debt distress for some of the poorest nations in the world.
Instead, restructuring must work with the climate prosperity objectives of V20 nations, to grow their economies, and to deliver climate resilient futures which address climate and debt sustainability in one go. We must also see climate risk fully integrated into Debt Sustainability Analysis as part of any restructuring.
And I am encouraged that Kristalina mentioned exactly this issue on how to include climate risks in DSA, which we feel is not happening right now. The DSAs that the Common Framework would come up with would not achieve the outcomes that we are seeking.
It should be clear to all of us: we can actually use the twin emergencies of debt and climate to address each other in a positive reinforcing upwards spiral. Debt restructuring helps to support climate resilience through adaptation and the low-carbon transformation in V20 nations as set out in their Climate Prosperity Plans.
In a sense this is a grand-scale debt-climate swap that supports a better outcome, and a more realistic chance of reaching the Paris targets, for the whole world.
Ladies and gentlemen, I hope you can all agree with me that these are outcomes worth fighting for.