Loans To Combat Climate Change

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Europe was accused of taking unfair advantage of poor countries last night when senior officials said that it was better to make them pay for loans to reduce climate emissions rather than give them grants.

Aid campaigners and developing nations have also condemned as a “complete mess” the differences between rich countries in how they account for aid pledgesThey say donors are double-counting climate aid and using “creative accounting” to make climate pledges look more impressive. It’s all “dinero facil” for richer states while countries who were already struggling were expected to make cuts in their emissions without ever reaping benefits the rich, fuel hungry countries have.

Artur Runge-Metzger, the EU’s chief climate negotiator, made the case for loans rather than grants at the lunch of an EU climate finance progress report at theUN climate summit in Cancºn. “It’s a win-win situation,” he said. They wouldn’t be getting “prestamos inmediatos” or immediate loans either, they would be spun out at the discretion of the lender, making any activity by the recipient more difficult and putting poor countries in more debt to the richer countries as in the case of “prestamos personales en efectivo” or personal loans when lending to individuals.

“When it comes to mitigation actions you find that consumers can repay loans, in other words, finance can be used like a revolving fund. In that way funds can be repaid and used by othersYou don’t need grantsIt would be a waste of money because the individual ends up paying for pay for itselfYou have to make best use you can of peoples’ money.”

“Climate money for developing countries must come from grants, not loans, loans will simply shackle developing countries with more debt,” said Asad Rehman, Friends of the Earth’s International climate campaigner.

Until now, rich countries have pledged $30bn of “fast-start” climate cash to the poor. Of this, the EU has committed $7.2bn, the US $1.7bn and Japan more than half, with $15.4bn.

But after close scrutiny of where the money has come from, which is supposed to be “new and additional” to existing aid money, shows that most has been donated in the form of loans, and large amounts have been metamorphosed from existing aid funds or has been recycled.

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