The World Bank says it will ease financing for countries hit by natural disasters.

Leaders and global organisations convened in Paris on Thursday, aiming to reach a consensus on crucial financial issues, including debt relief and climate financing. 

The World Bank announced plans to facilitate financing for countries affected by natural disasters, while the International Monetary Fund (IMF) achieved its target of making $100 billion in special drawing rights available for vulnerable nations.

The gathering, attended by around 40 leaders, including several African leaders, China's prime minister, and Brazil's president, sought to invigorate a new global finance agenda. 

The agenda aims to enhance crisis financing for low-income states, alleviate their debt burdens, reform financial systems established after conflicts, and allocate funds to address climate change, gaining consensus among influential bodies such as the G20, COP, IMF-World Bank, and United Nations.

Antonio Guterres, United Nations Secretary-General, criticised the international financial architecture, calling it outdated, dysfunctional, and unjust, stating that it failed to provide a global safety net for developing countries. 

African countries outlined their needs for increased below-market financing and grants, acknowledging the funding squeeze they face.

The summit proposed that multilateral development banks, including the World Bank, take more risks with capital to boost lending. 

World Bank President Ajay Banga outlined a “toolkit” during the summit, which includes debt repayment pauses, flexible fund redirection for emergency response, new insurance types for development projects, and assistance in establishing advance-emergency systems.

While the World Bank's measures aim to provide breathing space for developing nations, the issue of debt writedowns, known as ‘haircuts’, was not discussed. 

China, the largest bilateral creditor globally, has advocated for institutions like the World Bank and IMF to absorb some losses, which both institutions and wealthy countries oppose.

The summit addressed the urgency for a new vision for the World Bank and other multilateral financial institutions due to ongoing conflicts, the climate crisis, widening disparity, and declining progress. 

French President Emmanuel Macron, the summit's host, said action is needed to maintain trust.

The objectives of the summit include establishing roadmaps for the next 18-24 months, encompassing debt relief and climate finance.
The agenda draws inspiration from suggestions by a group of developing countries, led by Barbados Prime Minister Mia Mottley, known as the “Bridgetown Initiative”. 

The COVID-19 pandemic has exacerbated the debt distress of many impoverished countries, requiring them to service their obligations despite severe financial shocks.
African countries, among the world's poorest, face the dual challenge of addressing climate change impacts while transitioning to green economies.

Wealthy nations have yet to fulfil their promise of climate finance mobilisation, specifically committing to $100 billion annually, impeding progress in global climate talks.

Eight decades after the creation of the World Bank and IMF through the Bretton Woods Agreement, leaders aim to secure additional financing from multilateral lenders for the most in-need countries.

The IMF announced that it successfully made $100 billion in special drawing rights available for vulnerable nations, achieved by reallocating unused special drawing rights from wealthy countries to poorer ones.

US Treasury Secretary Janet Yellen called for greater effectiveness in the use of funds by multilateral development institutions before considering additional capital injections.

The summit also highlighted the importance of private sector engagement. Senegal signed an agreement as part of the Just Energy Transition Partnership, which entails substantial expansion of renewable energy capacity. Similar partnerships have been established with Indonesia, Vietnam, and South Africa.

Although the measures announced at the Paris conference fall short of the trillions of dollars required for a global low-carbon transition and assistance to climate-impacted nations, participants did express the need for action rather than pledges alone.

Taxation was a contentious topic at the summit, with many developing countries advocating for new taxes, such as levies on shipping, frequent flyers, fossil fuel company profits, or fossil fuel production.
Some experts also proposed a wealth tax to finance the recovery and rehabilitation of countries facing climate-related loss and damage.