WASHINGTON DC, 19 October 2022 – At the recently held annual meetings here of the International Monetary Fund (IMF) and World Bank, the Vulnerable 20 Group of Finance Ministers (V20) called for debt restructuring and other global financing reforms to help them manage the economic threats of both debt and climate change. The Philippines was the founding chair of the V20 in its establishment in 2015.

In four years, 55 member economies of the V20 are projected to collectively owe at least USD 435 billion in debt servicing payments, with the Philippines having the fifth highest outstanding commitments at USD 29.7 billion.

IMF managing director Kristalina Georgiva, finance ministers and ambassadors from V20 member economies, and donor countries and institutions attended last Sunday’s V20 ministerial, which stressed that high debt servicing costs exacerbate the economic effects of climate change by depressing revenues and exchange rates while boosting both inflation and the cost of capital itself. Over the past two decades, climate change has eliminated as much as USD 525 billion or a fifth of the collective GDP of the then-55 V20 economies (now 58).

“Our escalating risk exposure to climate hazards has resulted in increased appropriations for disaster relief, emergency funds, and increased insurance premiums annually. The increasing number of typhoons has limited our economic development and social protection coverage due to the fiscal strain of mitigating and adapting to climate change,” Department of Finance Secretary Benjamin Diokno stated in remarks delivered by Assistant Secretary Neil Cabiles.

On October 14, the V20 and the Group of Seven (G7) advanced economies, currently chaired by Germany, announced their agreement on the Global Shield against Climate Risks, a financial protection cooperation that accelerates pre-arranged financing to respond to loss and damage due to climate change. The Global Shield, which will be jointly launched by the V20 and G7 this November at the UN climate conference in Egypt or COP27, builds on the InsuResilience Global Partnership previously launched by the V20 and G20.

Renato Redentor Constantino, executive director of the Manila-based climate and energy policy group Institute for Climate and Sustainable Cities (ICSC), represented think tanks worldwide in the meeting of the InsuResilience high level consultative group where the Global Shield was endorsed.

“The climate crisis is a debt crisis. Predictable and accountable finance, as well as education and access to data, cannot come at a better time. We need to see clear pathways on how developed countries and multilateral development banks, among other major sources of finance, would step up and provide the Global Shield’s means of implementation,” Constantino said in the October 14 meeting.

In a forum last September, Cabiles noted that the financial impact of climate disasters in the country is foreseen to increase to as much as PHP 1.5 trillion in the next fifty years – an estimate that he said does not yet take the new Intergovernmental Panel on Climate Change report into account, meaning losses due to climate shocks could be even more significant.

“The Philippines remains steadfast in championing climate justice and in becoming a world leader in climate action. To deliver this, we recognize the crucial role of ample and accessible financing that must be mobilized towards actual and practical projects, programs and initiatives in developing and climate-vulnerable countries, without having to forgo opportunities to meet our own development agenda,” Diokno added.

NOTES TO THE EDITOR[1] The Vulnerable 20 Group of Finance Ministers is a dedicated cooperation of economies systematically vulnerable to climate change. It was formed in 2015 by the Philippine presidency of the Climate Vulnerable Forum and is currently chaired by Ghana. V20 membership stands at 58 economies representing some 1.5 billion people. https://www.v-20.org/

[2] The Philippines is one of the pathfinder countries under the Global Shield alongside Ghana, Bangladesh, Senegal, Costa Rica, and Fiji, in the hope that the initiative can be scaled up in these countries across the V20 and other vulnerable economies worldwide.

[3] The October 16 V20 ministerial was themed ‘When Is Now’, which was lifted from the global creative collaboration for urgent climate action led by ICSC’s cultural advocacy program The Agam Agenda, in collaboration with The Climate Reality Project Philippines, Climate Vulnerable Forum, and the V20. https://whenisnow.org

CONTACT
AC Dimatatac, ICSC: media@icsc.ngo, +63 998 546 9788, +63 917 149 5649

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Feature photo: Department of Finance Assistant Secretary Neil Cabiles delivering the remarks of Secretary Benjamin Diokno to IMF-V20 meeting.

Photo by Denise Fontanilla /ICSC/V20