IMF to set up eco fund

DAVOS (AFP) – The International Monetary Fund (IMF) is planning a 100-billion-dollar fund to help countries mitigate the effects of climate change, the agency’s head said. «The new growth model will be low carbon,» Dominique Strauss-Kahn, managing director of the IMF, told political and business leaders meeting at the World Economic Forum (WEF) in the Swiss ski resort of Davos this weekend. Efforts to deal with climate change could not be blocked «just because we cannot meet the financing needs,» he said. Developing countries do not have the funds for these adaptation measures, and developed countries’ ability to pay is also limited, as they are now weighed down by debt after funds were used to deal with the financial crisis. It was therefore necessary to «think out of the box» on the issue of funding, the IMF chief said. «We’ll have to find innovative ways to finance it,» Strauss-Khan said on Saturday. «We’re going to provide some ideas, built around a Green Fund devoted to finance 100 billion dollars (72 billion euros) a year, which is the figure currently accepted for addressing the problem based on the capitalization coming from central banks, backed by special drawing rights issued by the Fund,» he said. Special drawing rights are an international reserve asset created by the IMF in 1969 as a supplement to member states’ official reserves. They can be exchanged for common currencies. The IMF said on its website that it would issue a paper detailing ideas on how the fund would be financed. The United Nations has said that governments should invest in the green sector as they try to create new jobs in the wake of the economic crisis, as it would also help move toward a greener society. Azim Premji, who chairs India’s Wipro corporation, noted that the issues of tackling climate change and reducing poverty could be addressed together. «To me, if you combine these two challenges, they present an opportunity. The key is to look at the very fundamental fact that the developing world has still to build most of its energy infrastructure (and) physical infrastructure, and to buy most of its consumer goods,» he said in remarks published on the WEF’s website. «This very simple fact – that the developing world does not have these things – is the great opportunity for tackling climate change and ecological sustainability.»

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