Egyptian Finance Minister Mohamed Maait called on Tuesday for easing the debts of developing countries by launching new consultations that “makes the debt crisis part of the solution”.
Maait presented the “Sustainable Debt Coalition” to transform the debt burdens of developing countries into sustainable solutions for green recovery.
The minister spoke at the meetings with African counterparts and UN officials on the sidelines of the Economic Commission for Africa (ECA) 2023 annual meeting in Addis Ababa, Ethiopia.
Maait warned that debts affect development priorities, and reduce the capital available for investment in climate, noting that the problematic financial situation of emerging markets hinders climate action and development.
The minister called for kicking off a new path of consultations that makes the debt crisis part of the solution by encouraging additional sustainable green investments and addressing environmental challenges.
He stressed that the initiative will help in creating financial space to promote environmentally friendly investments and provides a diplomatic opportunity to align on using key performance indicators for debt issuances, whether in the context of refinancing existing debt or for new issuances.
The Egyptian Ministry of Finance said the minister called on countries and financial institutions to join the initiative and establish a common framework to regulate sustainable debt transactions.
Moreover, Maait added that the measures and the necessary initiatives to confront climate change have become crucial to reducing poverty and sustainably promoting shared prosperity.
He noted that it couldn’t be achieved unless African countries obtain affordable and low-cost financing, while mobilizing more green investments.
In 2010, African governments were spending an average of less than 5 percent of their revenues to service foreign loans, compared to 16.5 percent in 2021. This is higher than the average of 12.5 percent in other emerging markets, noted Maait.
African countries could not invest sufficiently in climate solutions except with a significant increase in financing, considering that Africa is the least contributing to climate change and the most affected, he explained.
Maait later met the UN Economic Commission for Africa’s Deputy Executive Secretary and Chief Economist, Hanan Morsi.
He revealed that Egypt is keen on launching the Sustainable Debt Coalition before June.
He noted that it was possible to hold an introductory session on the coalition and its objectives on the sidelines of the spring meetings of the International Monetary Fund and the World Bank in April.
Maait stressed the importance of African and non-African support for the Egyptian initiative to bolster green growth rates and accelerate economic development.
Meeting with Maait, the finance ministers of Ghana and Kenya expressed their readiness to support the initiative.