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Global Financial Pact on Climate Change

Global Financial Pact on Climate Change: The 'Global Financial Pact on Climate Change summit was held in Paris.

About the Pact: 

ObjectiveTo improve low-income governments’ access to crisis funding, reduce their debt loads, and free up money to address climate change.
Additional lending Capacity$200 billion more in lending capacity for multi-development banks (MDBs) to aid developing nations in tackling climate challenges.
Suspension of debt payment by World BankDisaster clauses for loan agreements were announced by the World Bank, suspending debt payments in the event of severe weather-related catastrophes and offering financial assistance.
Steps by IMF
  1. Poorer nations will get $100 billion in Special Drawing Rights (SDRs), an international reserve supplied by the IMF.
  2. Proposal to increase the amount of concessional financing available to developing nations by recycling SDRs from rich to poor nations.
Polluter TaxEncouraging the introduction of pollution charges as a tool for discouraging environmentally damaging practises.
EU Initiative The EU published a call to action on “Paris Aligned Carbon Markets” with the objective of using carbon pricing mechanisms to cover at least 60% of worldwide emissions.
ChallengeThe current pledge of $100 billion hardly scratches the surface of what the Global South would ultimately need to build resilience against climate change ($2 trillion yearly by 2030 for developing nations outside of China).

Why in news?

The ‘Global Financial Pact on Climate Change summit was held in Paris.