International Monetary Fund (IMF) Managing Director Kristalina Georgieva said yesterday the world is “falling short” of commitments made to countries like The Bahamas, which are most affected by climate change, and she agreed to work closer with The Bahamas on carbon credits and additional financing.
Georgieva made the comments following a meeting with Prime Minister Philip Davis on the sidelines of The 2022 United Nations Climate Change Conference (COP27) in Sharm El-Sheikh, Egypt.
“We have a meeting of minds and meeting of hearts,” she said.
“The world is falling short of commitments made to those countries that are most affected by the climate crisis. We have to find a way to unleash more financing for The Bahamas and all the countries like The Bahamas.
“Carbon offsets, carbon credits can be an asset class for The Bahamas that helps to finance adaption to climate shock.”
The World Bank has estimated that trading in carbon credits could reduce the cost of implementing countries’ nationally determined contributions (NDCs) by more than half – by as much as $250 billion by 2030.
The Bahamas is seeking to enter the carbon market by the start of 2023, invoking Article 6 of the Paris Agreement, which allows countries to voluntarily cooperate with each other to achieve emission reduction targets set out in their NDCs.
Davis said he was grateful that Georgieva indicated that she will look into how to assist The Bahamas in the monetization of its carbon credits as a new asset class.
“I’m so delighted that we were able to have this meeting this afternoon to share our views, concerns and the way forward on these things,” he said.
“One thing that comes out of this meeting is that neither of us are going to give up.”
Davis said he is “very encouraged” by Georgieva’s support of The Bahamas.
He said he appreciates that she will lend her voice to some of the challenges that The Bahamas is facing.
“… We will lend our voice to some of the initiatives that they have started to create,” Davis said.
“I am very appreciative of the sensitivity that the IMF is showing to the challenges that small island developing states, like ours, have, particularly with this existential threat that’s upon us.”
Davis said the issue of debt sustainability came up during his meeting with Georgieva.
“She has offered to look into how they factor in loss, debt incurred by consequence of climate change in the debt profile, and how that impacts our sustainability,” he said.
Georgieva added that the IMF has already made a step in that direction by creating concessional financing capacity to support countries that are vulnerable to climate shocks.
She said the IMF has $40 billion available for 20 years.
“… It is available not just to low-income countries,” Georgieva said.
“It is available to vulnerable middle-income countries like The Bahamas. Everybody who follows up this topic knows that vulnerability to climate shocks has not been accepted as criteria for concessionality until now.”