- 12.04.2023
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Bangladesh has been the first country in Asia to agree to an arrangement under the Resilience and Sustainability Trust (RST).
As Bangladesh was hit by deadly floods in 2022, and as its fossil fuel dependency triggered a balance of payment crisis after the Russian invasion of Ukraine, there’s no doubt Bangladesh needs to accelerate its investments in climate policy.
The RST’s objective is to address balance of payment issues related to long-term challenges as climate change and augment policy space and financial buffers to mitigate these risks.
It is highly uncertain how can the RST rationale effectively close the huge climate finance gaps through financial sector reforms at the urgency that is needed. Bangladesh needs grants and highly concessional climate finance to drive away from fossil fuels.
Our latest briefing on the Resilience and Sustainability Trust has these recommendations for the IMF:
- The IMF should support subsidies for local and sustainable renewable energy to ensure energy access. This can be done by reshifting phased out fossil fuel subsidies rather than eliminating them altogether.
- The IMF should assess civil society’s concerns around the distributional impact of fossil fuel subsidies phaseout and energy governance in renewables’ generation.
- The IMF should include adaptation and loss and damage finance in its Debt Sustainability Analysis and its Article IV consultations, in order to properly assess them when designing loan programmes.
- The IMF should consider the increasing interest rates of the Resilience and Sustainability Trust and support a new issuance of SDRs, especially to those countries that have been negatively affected by the spike in fossil fuel and food prices and are vulnerable to climate change
Download the briefing here.
Media contact: Federico Sibaja, Recourse Campaign Manager, federico[at]re-course.org