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Speaker 1: Hi.

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Speaker 2: I'm Olivia Rudgaard, a reporter for Bloomberg Green. I'm currently

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Speaker 2: working on a piece about climate anxiety, and I have

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Speaker 2: request for zero listeners.

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Speaker 3: Climate change can.

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Speaker 2: Cause stress, both of people directly affected by it and

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Speaker 2: for those concerned about its effects on others and their future.

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Speaker 2: If you're okay to share your experience of this, we

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Speaker 2: would love to hear from you. Tell us what makes

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Speaker 2: you worry, how your worries affect your life, and what

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Speaker 2: helps you feel better. Take our short survey. There's a

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Speaker 2: link in the show notes.

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Speaker 3: Thank you, Hi. It suckshot. One of the most important

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Speaker 3: discussion points at COP twenty eight will be how to

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Speaker 3: get money for climate projects in developing countries that maybe

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Speaker 3: to reduce emissions, help adapt to impacts, or compensate for

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Speaker 3: the damages caused. It's what COPS need to solve if

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Speaker 3: there are to be future agreements among all countries. Earlier

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Speaker 3: this year, I spoke with avinash Pursod, who is Barbados's

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Speaker 3: Climate Envoy and the brains behind the Bridgetown Agenda. It's

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Speaker 3: a wide ranging set of ideas that could help move

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Speaker 3: trillions of dollars into developing countries. Ahead of COP twenty eight.

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Speaker 3: We are replaying that episode for anyone who might have

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Speaker 3: missed it. Welcome to Zero. I'm Akshatrati. This week canaries,

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Speaker 3: coal mines, and a call for cash. Every now and

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Speaker 3: then I get to hear an idea that, if it's

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Speaker 3: pulled off, will be truly transformational. This episode is about

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Speaker 3: one of those ideas. At COP twenty seven last year,

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Speaker 3: there was a moment that took the conference by storm.

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Speaker 3: Mia Motley, the Prime Minister Barbados, took to the stage

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Speaker 3: in front of world leaders and in a blistering speech,

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Speaker 3: gave her vision to fix the climate crisis.

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Speaker 4: I come from a small island state that has high ambition,

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Speaker 4: but that is not able to deliver on that high

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Speaker 4: ambition because the global industrial strategy that we have has

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Speaker 4: fault lines in it.

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Speaker 3: Typically at these meetings, poor countries ask for money from

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Speaker 3: rich countries and don't get it. It's a reasonable demand

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Speaker 3: because poor countries didn't cause the problem, but need to

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Speaker 3: be a part of the solution. So to break the deadlock,

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Speaker 3: Motley had a different idea. She proposed a plan to

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Speaker 3: unlock trillions of dollars in private investments that could turbocharge

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Speaker 3: the buildout of climate solutions like solar and wind power

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Speaker 3: in developing countries.

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Speaker 4: The global North borrows interest rates of between one to

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Speaker 4: four percent, the global South of fourteen percent. This is

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Speaker 4: the ball reality, and we have come here to ask

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Speaker 4: us to open our minds to different possibilities. We believe

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Speaker 4: that we have a plan.

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Speaker 3: That plan is known as the Brigachdown Initiative, and it

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Speaker 3: calls for the reform of the current global financial system

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Speaker 3: that was built in the aftermath of World War Two.

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Speaker 3: At that time, half of today's countries didn't exist. The

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Speaker 3: country I was born in, India, was still a British colony,

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Speaker 3: and yet that system, made up of institutions like the

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Speaker 3: World Bank and the International Monetary Fund, continued to be

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Speaker 3: crucial to helping developing countries develop further. In twenty twenty one,

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Speaker 3: these so called multilateral development banks spent fifty one billion

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Speaker 3: dollars on climate finance, which sounds like a lot of money,

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Speaker 3: but it's nowhere near enough to meet climate goals. My

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Speaker 3: guest today hopes to hugely increase that figure and is

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Speaker 3: the architect of the Bridgetown Initiative, Avinache Persoud. He's the

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Speaker 3: Special Envoy on investment and financial services for Barbados and

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Speaker 3: a key advisor to Mia Motley.

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Speaker 1: Where canaries in the mind and you could either think, well,

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Speaker 1: how do I get some little bit of air for me,

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Speaker 1: I'm watching these other canaries in the mine being severely

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Speaker 1: starved oxygen. Or you could try and fix the mind.

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Speaker 1: And that's the only fundamental way of solving this problem.

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Speaker 3: In its simplest form, Bridgetown asks for one big thing,

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Speaker 3: using the power of these giant financial institutions to make

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Speaker 3: it far less risky to invest money in climate solutions

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Speaker 3: in developing countries, turning a trickle of billions into a

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Speaker 3: flood of trillions. The global financial system is complicated, and

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Speaker 3: so are the solutions to fix it. However, without those fixes,

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Speaker 3: there is little chance of meeting climate goals. So it's

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Speaker 3: great to get a chance to question one of the

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Speaker 3: smartest people working on these solutions. I sat down with

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Speaker 3: Avinash ahead of the summit to discuss some of his

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Speaker 3: fixes and why he thinks now is the time these

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Speaker 3: aging financial institutions will be finally reformed. Avinash, Welcome to

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Speaker 3: the show.

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Speaker 1: Oh thank you.

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Speaker 3: How did you go from being born in Barbados to

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Speaker 3: trying to fix the global financial architecture for the climate.

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Speaker 1: Hera Well. I left Barbados when I was seven years old,

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Speaker 1: but I do think that it left a lasting impression

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Speaker 1: on me. I my father used to when we arrived

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Speaker 1: in Northwest London. This is in the nineteen seventies, there

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Speaker 1: weren't many people of color, and he said to me,

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Speaker 1: you are the ambassador to Barbadis for Northwest London. So

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Speaker 1: I'd been going around the place being very proud of Barbados,

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Speaker 1: saying good morning to all these Brits who were startled

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Speaker 1: that some stranger in the street would say good morning

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Speaker 1: to them at aged seven. So it had a lasting

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Speaker 1: impression on me. My dad was a development economist. He

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Speaker 1: was involved in a lot of the big struggles of

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Speaker 1: the nineteen eighties, like anti apartheid. He helped write the

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Speaker 1: sanctions against South Africa, some of the first commissions on

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Speaker 1: the environment, the Brutland Commission. That excited me. So I

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Speaker 1: wanted to be a development economist, and he said to

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Speaker 1: me he'd fund my first degree, but not my second.

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Speaker 1: So I got a job in the city of London,

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Speaker 1: and I was quite good at it and quite enjoyed

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Speaker 1: the fact that people were listening to me, and if

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Speaker 1: I developed economist, people began listening to me because finance

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Speaker 1: is the rub of most problems.

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Speaker 3: Now Mia Motley is the Prime Minister of Barbados and

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Speaker 3: has become a star in climate circles as a voice

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Speaker 3: that is giving importance to finance and how to move

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Speaker 3: billions to trillions. She gave this defining speech at both

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Speaker 3: COP twenty six in Glasgow and then COP twenty seven

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Speaker 3: in Sharammel Shaken, Egypt about the vulnerability of small island

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Speaker 3: states to climate change. Now, how did you end up

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Speaker 3: working with Mia Motley on these issues?

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Speaker 1: Well, Prime Minister to Motley and I met at college

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Speaker 1: aged eighteen here at the London School Economics. She was

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Speaker 1: studying law, I was doing economics, and so that's how

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Speaker 1: I ended up getting to know her. Years years later,

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Speaker 1: I'm back in Barbados advising her on her finance and budgets.

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Speaker 1: And we have the most horrific hurricane season. It's twenty seventeen,

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Speaker 1: two category five monster hurricanes. I mean, when you see

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Speaker 1: the satellite pictures, these hurricanes are bigger than the entire

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Speaker 1: chain of islands, and it crashes Dominica. They lose two

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Speaker 1: hundred and twenty six percent of GDP in four hours.

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Speaker 1: So anyway, she sends me off and says, this is

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Speaker 1: the time U economists need to step up. Here's a

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Speaker 1: country that needs some support. And so I was involved

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Speaker 1: in helping them and develop their plans after the hurricane.

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Speaker 1: And that was really, to be honest with you, and

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Speaker 1: I'm not particularly proud of it, but it was only

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Speaker 1: that point that I really began understanding climate change and

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Speaker 1: the impact on countries who were climate vulnerable. What were

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Speaker 1: the financial and economic consequences of this, and what the

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Speaker 1: global system. Howeveryone said that they cared, but how there

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Speaker 1: was actually the end of the day, very little money.

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Speaker 3: So you visit Dominica and you realize that climate change

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Speaker 3: is going to be a massive problem for countries like Barbados.

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Speaker 3: But then the solution set you ended up developing is

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Speaker 3: not just addressing the problems of climate vulnerable countries, but

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Speaker 3: trying to fix the entire global financial architecture, which is great,

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Speaker 3: But how do you go from that problem, which is

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Speaker 3: local caused by a global crisis, to try to address

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Speaker 3: a global crisis of another sort.

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Speaker 1: Well, we're sitting there thinking about why is it that

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Speaker 1: we're in this situation, small island states in the tropics,

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Speaker 1: I mean, climate vulnerable countries are not just small states

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Speaker 1: or island states. There really any country between the Tropics

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Speaker 1: of Cancer and the Tropic of Capricorn. Within that band,

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Speaker 1: that's where temperatures are rising to some of the highest

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Speaker 1: levels and where sea levels are increasing to the highest levels.

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Speaker 1: I mean, I'm an economist, so I know no science.

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Speaker 1: I have to be explained to me that when the

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Speaker 1: glaciers melt at the poles, that the water doesn't stay

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Speaker 1: there because of the spinning of the earth. The water

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Speaker 1: ends up on the equator, and so our sea levels

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Speaker 1: will rise by three quarters of meter or more. So

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Speaker 1: low lying areas in the tropics are very vulnerable. So

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Speaker 1: we're sitting there where canaries in the mine, and you

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Speaker 1: could either think, well, how do I get some little

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Speaker 1: bit of air for me I'm watching these other canaries

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Speaker 1: in the mine being severely starved of oxygen, or you

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Speaker 1: can try and fix the mine. And that's the only

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Speaker 1: fundamental way of solving this problem. And that's about not

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Speaker 1: just our loss and damage and climate adaptation and resilience.

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Speaker 1: The biggest story is climate mitigation. There we see the

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Speaker 1: countries who could do something about looking at each other

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Speaker 1: across the table and pointing each other, and all of

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Speaker 1: them saying that this is very important, this is very urgent,

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Speaker 1: and you, pointing across the table, need to do more

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Speaker 1: about it, and we're stuck.

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Speaker 3: You wrote a paper that defined the problem as a deadlock,

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Speaker 3: and it's really precisely the word to be used in

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Speaker 3: this case, because I've been to cop meetings before. These

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Speaker 3: are places where rich countries and poor countries come together

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Speaker 3: and the finger pointing gets really problematic. Rich countries would

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Speaker 3: say to poor country as well, we understand we cause

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Speaker 3: this problem, but you now need to reduce emissions too,

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Speaker 3: because otherwise we don't have the carbon space available to

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Speaker 3: deal with this problem. And then poor countries would go,

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Speaker 3: we can do that if you give us money. Where

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Speaker 3: is the money? And that money never comes. And so

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Speaker 3: one way to think about the climate problem is really

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Speaker 3: it's a finance problem, and so it's understandable that trying

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Speaker 3: to address it through the finance lens is crucial. So

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Speaker 3: what is it that you think will unlock it.

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Speaker 1: Well, I think it's important to say that two years ago,

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Speaker 1: the prevailing view was it was an ignorance problem. It

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Speaker 1: was a science problem. People didn't believe the science. They

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Speaker 1: were in denial. They just didn't believe it. And we

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Speaker 1: were listening to people were thinking, that's not the problem.

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Speaker 1: The problem is that that everyone believes someone else should

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Speaker 1: be doing more. And our issue was the only way

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Speaker 1: we could get around that problem is finance. Why do

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Speaker 1: they believe someone else should do more because it's a

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Speaker 1: cost to them to do it. So if we can

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Speaker 1: make it easy for them to do it, we can

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Speaker 1: reduce the cost for them, we can finance it. They

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Speaker 1: won't spend their time pointing their finger to someone else.

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Speaker 1: They will get it done.

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Speaker 3: And so Dominica happens. You go back and you start

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Speaker 3: working on trying to solve this problem. This is back

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Speaker 3: in twenty seventeen eighteen nineteen period. You put out what

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Speaker 3: is called a Bridgetown Agenda, named after the capital of

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Speaker 3: Barbados last year, and you're now this month coming out

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Speaker 3: with an update to that agenda. Let's go through the

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Speaker 3: broad strokes of what that agenda does and how it

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Speaker 3: addresses this finance problem.

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Speaker 1: So the experts say that developing countries need two point

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Speaker 1: four trillion dollars every year to deal with climate. So

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Speaker 1: that's mitigating the climate, preventing it getting worse. That's resilience

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Speaker 1: and adapting to the existing change in the climate, and

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Speaker 1: that's also addressing the loss and damage. So you add

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Speaker 1: all that together two point four trillion dollars. Now, of

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Speaker 1: course few people can imagine two point four trillion dollars.

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Speaker 1: So I think the way to think about this is

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Speaker 1: that all of the aid in the world add up

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Speaker 1: everything for everything is two hundred billion dollars per year.

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Speaker 1: So we're talking about something that is twelve times more

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Speaker 1: than what's currently happening every year, twelve times, and so

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Speaker 1: you know you've got a problem because they might be

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Speaker 1: able to increase it by ten percent, no one's increasing

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Speaker 1: it by twelve times. So bridge down is the solution

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Speaker 1: to get to the twelve times. So we say we

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Speaker 1: can't do it, but it needs three different buckets of financing.

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Speaker 1: The first bucket the biggest bucket. It's stuff you have

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Speaker 1: to do which has a revenue stream attached. You can

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Speaker 1: do it and it makes money. So you know, building

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Speaker 1: a farm makes money, a wind turbine makes money, a

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Speaker 1: hydroelectric power makes money. So inside this bucket is a

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Speaker 1: lot of things that make money but will mitigate the climate,

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Speaker 1: will prevent it getting worse, will help us in the

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Speaker 1: green transformation. What we need to do to fill that

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Speaker 1: bucket is we need to find a way of catalyzing

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Speaker 1: the private sector to get them into doing this in

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Speaker 1: developing countries. They're doing this in the rich countries. Eighty

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Speaker 1: one percent of all climate mitigation green transformation stuff is

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Speaker 1: financed by the private sector in rich countries, but only

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Speaker 1: fourteen percent in the poor countries. So we've got to

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Speaker 1: change that equation. And we've got a solution to it.

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Speaker 1: It's around guaranteeing the foreign exchange risk that the private

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Speaker 1: investor has when they go to developing countries. But we

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Speaker 1: can come back to that.

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Speaker 3: Yes, I mean, that's the hardest solution to get your

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Speaker 3: head around, but it also is the biggest problem to address.

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Speaker 3: And then the two other buckets.

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Speaker 1: So the second bucket, second biggest, This is for things

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Speaker 1: which they are no revenues, but they are savings. And

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Speaker 1: so if there are no revenues but savings, you can

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Speaker 1: borrow to fill this bucket. Now, what's in this bucket,

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Speaker 1: This is stuff like a sea wall. You don't make

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Speaker 1: money from having a sea wall, but you save money

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Speaker 1: from all the times that the capital city is not

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Speaker 1: flooded because you've got this new sea wall. All very

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Speaker 1: unglamorous stuff, but very very important and saves a lot

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Speaker 1: of money. So this bucket is about resilience, adaptation. We

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Speaker 1: can fund a lot of those things. The third bucket

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Speaker 1: is the smallest bucket, addressing the loss and damage.

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Speaker 3: Right, if you don't reduce emissions and you don't adapt

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Speaker 3: to warming, then you will get damages from climate impacts.

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Speaker 1: That's right, and there's a fair amount of those damages

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Speaker 1: in which you have to respond. All of your low

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Speaker 1: income homes have lost their roof, they've washed away, and

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Speaker 1: these are people who do not have any resources, do

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Speaker 1: not have any ability to ensure. Insurance companies are not

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Speaker 1: going to ensure them, so they're no revenues and they're

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Speaker 1: no savings. So we can't borrow for this, so we

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Speaker 1: need grants. So the grand bit we've made the smallest

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Speaker 1: bit possible. We've shrunk it. It's not a two point

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Speaker 1: four trillion dollar task, but it's one hundred billion dollar task,

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Speaker 1: and we recognize that governments don't have one hundred billion

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Speaker 1: dollars stuff behind the sofa EID budgets are not going

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Speaker 1: to double. They're not going to increase from two hundred

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Speaker 1: billion to three hundred billion, So we need new revenue streams.

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Speaker 1: That's something like an emissions tax in the shipping industry.

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Speaker 1: Shipping is a significant part of emissions increases. There's a

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Speaker 1: proposal for a one hundred dollars per ton of carbon

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Speaker 1: as a result of emissions in the shipping industry. That

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Speaker 1: would fund the third of that bucket. Oil and coal exports.

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Speaker 1: If there was a small levee on those exports, a

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Speaker 1: one percent levee, that would fund the other two thirds.

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Speaker 1: So that's how we deal with that third bucket.

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Speaker 3: Let's walk through the most complicated and the largest bucket,

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Speaker 3: which is to try and make private capital move to

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Speaker 3: poor countries at a much faster rate, at a bigger

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Speaker 3: volume every year for the rest of this century. Why

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Speaker 3: is it not already happening? Because you get to hear

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Speaker 3: these things, which is, solar is the cheapest form of

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Speaker 3: electricity you can get anywhere in the world, especially in

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Speaker 3: countries like India and other developing countries within the tropics,

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Speaker 3: the places that have the impact. If that's the case,

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Speaker 3: why does the money not flow. So there are two

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Speaker 3: problems of.

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Speaker 1: The idea that renewable energy is free and easy and cheap.

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Speaker 1: There are two problems. Firstly, they're very capital intensive, so

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Speaker 1: I've got to buy the land, I've got to buy

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Speaker 1: the panels, I've got to erect them and connect them,

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Speaker 1: and that's very capital intensive. Most of that is foreign

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Speaker 1: currency required for that. And then I'm getting revenues for

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Speaker 1: the solar farm in local currency, so I have a

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Speaker 1: big bill that's a foreign currency bill and paying for

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Speaker 1: it through local currencies. Foreign investors need to be involved

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Speaker 1: because they're the ones with the foreign currency and they

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Speaker 1: look at this country and they say, well, you know,

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Speaker 1: there's risks of the project, but the solar farms are

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Speaker 1: pretty standard tech today, win farms, hydroelectric. There isn't really

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Speaker 1: a tech problem. The problem is that the country may

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Speaker 1: have a currency risk. There may be a credit risk.

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Speaker 1: And if you unpack the risks involved in that investment,

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Speaker 1: it's not tech, it's not the project, it is currency

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Speaker 1: in credit.

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Speaker 3: So these risks, which we can understand as macro risks,

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Speaker 3: come in different from one that is easy to understand

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Speaker 3: is political risk. The country may be a democracy, but

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Speaker 3: may have a military dictatorship just sitting in the back,

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Speaker 3: which comes in and there's a problem. There could be

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Speaker 3: regulatory changes made because there's been a change in the

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Speaker 3: party that rules the country. Those are political risks that

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Speaker 3: you can kind of understand. But what does currency risk mean?

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Speaker 3: Currency risks are an interesting basket which collects almost all

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Speaker 3: of those other country type risks. So if the change

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Speaker 3: your government creates uncertainty, your currency tends to fall. If

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Speaker 3: people are uncertain whether you could pay your debts, your

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Speaker 3: currency falls. And so currencies are very volatile, and when

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Speaker 3: institutional investors in America in Europe invest, they want to

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Speaker 3: hedge themselves from these kinds of risks that they're unfamiliar with.

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Speaker 3: Hedging involves one company paying another company for a risk

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Speaker 3: they don't want to take. For example, if you're an

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Speaker 3: American investor with assets in India and you're worried that

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Speaker 3: the Indian rupee could fall in value, you would ask

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Speaker 3: a bank to take care of that risk for you.

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Speaker 3: If the rupee does fall, the bank will deal with

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Speaker 3: the losses and you'll still get the exchange rate read

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Speaker 3: with the bank. If the ruby rises in value, the

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Speaker 3: bank makes money, but you still get the same exchange rate.

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Speaker 3: You the investor don't have to be worried about currency risk,

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Speaker 3: and the bank has a service it can make money off.

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Speaker 1: Institutional investors in America in Europe, they'll say, I'm in

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Speaker 1: the energy sector and I understand energy. I'm in the

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Speaker 1: tech sector. I understand tech. I don't understand the South

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Speaker 1: African rand. I'm not an expert in that or the

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Speaker 1: Indonesian rupia, and so I want to hedge myself from

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Speaker 1: those risks. And the hedging costs basically eat up about

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Speaker 1: two thirds to three quarters of the return, and so

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Speaker 1: what they're left with the hedged return is measly like

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Speaker 1: a three to four percentage point return. And if you're

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Speaker 1: an institutional investor, you're thinking, why add that to my portfolio.

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Speaker 1: I want a seven or eight percent return.

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Speaker 3: And at least let's take an example of a project

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Speaker 3: to be able to understand these numbers, because it gets

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Speaker 3: easier if we focus on a solar plant in South Africa,

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Speaker 3: a developing country that has a very coal heavy electricity sector,

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Speaker 3: but is willing and is big participant in the global

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Speaker 3: system to try and address this problem through finance. So

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Speaker 3: say you were building a solar plant in South Africa.

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Speaker 3: Give it ten million dollars. Now what is it that I,

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Speaker 3: the private investor who would like to invest in your

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Speaker 3: solar plant, need to think about? And why would I

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Speaker 3: choose you over a solar plant I could build in

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Speaker 3: the UK.

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Speaker 1: So you're not so much worried about solar But the

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Speaker 1: problem is that you, the investor, are only prepared to

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Speaker 1: go if the return not only gives you the same

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Speaker 1: return you'd get for solar farm in Germany, say, but

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Speaker 1: an additional return for all of the additional risks the

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Speaker 1: currency risk, the credit risk, the political risk, And when

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Speaker 1: you take all of those risks out, it's hard for

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Speaker 1: those projects to give you the return that you want.

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Speaker 1: So we need to find a way of hedging those

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Speaker 1: risks cheaper to make the returns more attractive. And there's

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Speaker 1: a way we can do it, because if you observe

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Speaker 1: in the case of South Africa is a good one.

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Speaker 1: You know, the cost to hedge the currency risk that

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Speaker 1: the South African currency is called the rand. The rand

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Speaker 1: is a fairly volatile currency and it costs you, you know,

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Speaker 1: eight to nine percent to eliminate the risk of loss

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Speaker 1: from the currency eight to nine percent per year.

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Speaker 3: Which means that if I were making say a profit

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Speaker 3: of five percent on my German solar farm, I would

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Speaker 3: need to make a profit of fourteen percent in South

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Speaker 3: Africa for those projects to be comparable. For the financial

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Speaker 3: written that I, the investor, is getting from the solar plant.

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Speaker 3: Is that right?

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Speaker 1: Exactly, same tech, same project. It can make five percent

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Speaker 1: in Germany, the equivalent demand it needs to make in

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Speaker 1: South Africa to attract me is fourteen percent. Because I

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Speaker 1: got to take out nine percentage points of that fourteen

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Speaker 1: And why do you have to take out nine because

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Speaker 1: that's all the currency risk and the credit risks for

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Speaker 1: me investing in South Africa. The thing is that when

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Speaker 1: we look back in time, the actual risk, so how

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Speaker 1: much did the currency fall? It wasn't nine percent. It

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Speaker 1: was in a case of South Africa, it was like

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Speaker 1: four percent. So I'm over paying for that risk by

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Speaker 1: five percentage points per year. If I didn't overpay for

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Speaker 1: that risk, that project could have yielded me not a

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Speaker 1: five percent return, but a ten percent return.

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Speaker 3: That sounds like somebody left money on the table, which

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Speaker 3: is to say markets usually the whole idea of them

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Speaker 3: is through their functioning will find the most efficient way

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Speaker 3: to make these hedges possible. There should not be a

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Speaker 3: gap between what happened in reality and what kind of

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Speaker 3: risk they hedge. So why is it that they are

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Speaker 3: overpaying for these hedges if the reality of the currency

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Speaker 3: risk is not appearing.

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Speaker 1: I think it's a couple reasons. You might argue that

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Speaker 1: there's an uncertainty premiere that South Africa's one of one

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Speaker 1: hundred and ninety two countries, and people aren't investing heavily

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Speaker 1: to be experts in so Africa because they've got other

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Speaker 1: countries to look at, and so they feel that there

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Speaker 1: are risks out there which they don't fully understand, and

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Speaker 1: there's some uncertainty. Then also, the investment may make a

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Speaker 1: return in the long run, but in the intervening period

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Speaker 1: it could be quite volatile, and investors tend to be

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Speaker 1: risk averse. They don't like to use a lot of

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Speaker 1: capital money that they can absorb a loss, and so

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Speaker 1: they don't like even if you offer them a nice

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Speaker 1: return at the end, they don't like the fact that

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Speaker 1: they would have had a few loss, a few heartbeats

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Speaker 1: along the way, and that they had to carry a

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Speaker 1: lot of this loss absorbing amount of spare cash, if

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Speaker 1: you like in the indiveniing perid, they can do more

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Speaker 1: with that money. It is what economists we call it

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Speaker 1: a market failure because this thing, this activity will make

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Speaker 1: money and will have a huge social benefit, could save

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Speaker 1: the planet. Right, you can't get bigger than that. But

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Speaker 1: there's other things the private sector could do with their money, right,

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Speaker 1: and they could make more money, and that's doing some

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Speaker 1: of the short term versus the long term. In the

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Speaker 1: short term and on a year to year basis or

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Speaker 1: even five year basis, they don't want to be seen

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Speaker 1: as making losses even though overall in the thirty year

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Speaker 1: life of this solar planet they will make more money.

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Speaker 1: You're right, But it's also the fact that it may

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Speaker 1: make money, but it may not make enough money because

436
00:25:57,240 --> 00:26:00,560
Speaker 1: they can do other things with their money. So simply

437
00:26:00,600 --> 00:26:04,359
Speaker 1: saying it's profitable isn't enough if there other things that

438
00:26:04,400 --> 00:26:06,439
Speaker 1: are more profitable. Well, the reason why we call it

439
00:26:06,440 --> 00:26:11,439
Speaker 1: a market failure is a it's profitable privately, there's a

440
00:26:11,480 --> 00:26:15,080
Speaker 1: private return to be had, but socially there's a huge

441
00:26:15,119 --> 00:26:18,360
Speaker 1: return to be had. So there's a social return that's

442
00:26:18,400 --> 00:26:21,760
Speaker 1: being lost because the private sector is finding that there

443
00:26:21,760 --> 00:26:25,000
Speaker 1: are other things which there's a better private return. So

444
00:26:25,040 --> 00:26:27,960
Speaker 1: that's a classic example of where we need to kind

445
00:26:27,960 --> 00:26:31,639
Speaker 1: of align the social return and the private return to

446
00:26:31,720 --> 00:26:34,720
Speaker 1: get private savings invested in this thing.

447
00:26:35,160 --> 00:26:38,960
Speaker 3: So we're talking here about getting investors from abroad to

448
00:26:39,000 --> 00:26:41,959
Speaker 3: come into countries like South Africa. But what is it

449
00:26:42,160 --> 00:26:45,440
Speaker 3: with countries like India, which are large economies which could

450
00:26:45,560 --> 00:26:49,000
Speaker 3: just have their own central banks, create their own money,

451
00:26:49,280 --> 00:26:52,560
Speaker 3: lend it out to their own private players. Why do

452
00:26:52,640 --> 00:26:56,040
Speaker 3: they have to rely on foreign investors, especially if it's

453
00:26:56,040 --> 00:26:56,840
Speaker 3: a large economy.

454
00:26:56,920 --> 00:26:59,800
Speaker 1: Well, I think that a couple of reasons. Firstly, even

455
00:27:00,119 --> 00:27:03,880
Speaker 1: though it's a large country, there's a large need and

456
00:27:04,240 --> 00:27:09,000
Speaker 1: savings are good in India, but they're not bountiful the

457
00:27:09,160 --> 00:27:12,560
Speaker 1: other things that those segments could do. And if you

458
00:27:12,600 --> 00:27:15,199
Speaker 1: remember earlier, we talked about the fact that there's a

459
00:27:15,240 --> 00:27:19,280
Speaker 1: foreign currency requirement because they may need to import the

460
00:27:19,320 --> 00:27:23,520
Speaker 1: tech and the panels and a range of things. I mean,

461
00:27:23,600 --> 00:27:27,840
Speaker 1: India is investing. Our issue isn't that some countries aren't investing.

462
00:27:27,880 --> 00:27:31,360
Speaker 1: They're just not investing fast enough. They may feel they're

463
00:27:31,359 --> 00:27:34,160
Speaker 1: investing at the right pace for them, and it may

464
00:27:34,240 --> 00:27:37,439
Speaker 1: be the right pace for their economy. It's just not

465
00:27:37,480 --> 00:27:40,040
Speaker 1: the right pace for the planet. So we need to

466
00:27:40,119 --> 00:27:44,679
Speaker 1: turbocharge that investment by making it cheaper and easier and

467
00:27:44,760 --> 00:27:45,440
Speaker 1: more profitable.

468
00:27:50,840 --> 00:27:53,280
Speaker 3: So far, we've talked about the problem Avinash is trying

469
00:27:53,320 --> 00:27:56,119
Speaker 3: to solve, and with the bridge Doown initiative, he thinks

470
00:27:56,359 --> 00:27:59,320
Speaker 3: he has a solution that's coming up right after the

471
00:27:59,359 --> 00:28:12,879
Speaker 3: break through the Bridgetown agenda too. Point Zho, you say

472
00:28:13,040 --> 00:28:17,040
Speaker 3: that with this currency hedge risk solution, and let's talk

473
00:28:17,080 --> 00:28:19,800
Speaker 3: about the solution, you could move as much as one

474
00:28:19,840 --> 00:28:25,800
Speaker 3: point five trillion dollars of private capital into climate oriented

475
00:28:25,840 --> 00:28:29,920
Speaker 3: solutions that would be profit making on an annual basis.

476
00:28:30,119 --> 00:28:31,280
Speaker 3: So what is the solution.

477
00:28:31,720 --> 00:28:35,119
Speaker 1: The solution is that we have an agency that sits

478
00:28:35,160 --> 00:28:38,600
Speaker 1: in the War Bank and the IMF. The agency is

479
00:28:38,640 --> 00:28:42,360
Speaker 1: a not for profit. It is not trying to make money.

480
00:28:42,480 --> 00:28:46,200
Speaker 1: It is trying to make sure there's no overpayment to

481
00:28:46,240 --> 00:28:49,560
Speaker 1: hedge these risks. It's not saying they're no risks. It's

482
00:28:49,600 --> 00:28:52,440
Speaker 1: not saying there's a cost for the risk. It's eliminating

483
00:28:52,600 --> 00:28:58,200
Speaker 1: the over payment. The over payment will substantially cut the

484
00:28:58,240 --> 00:29:01,480
Speaker 1: cost of hedging and significantly boost the rate of return.

485
00:29:01,880 --> 00:29:04,560
Speaker 1: The rate of return of these projects now will jump

486
00:29:04,760 --> 00:29:06,840
Speaker 1: from say a four percent rate of return, which is

487
00:29:06,920 --> 00:29:10,600
Speaker 1: uninteresting for investors, to more like a nine percent radio return,

488
00:29:10,600 --> 00:29:14,360
Speaker 1: which is suddenly a classic kind of return to fit

489
00:29:14,440 --> 00:29:19,160
Speaker 1: into international portfolios of investment. From ive'st the point of view,

490
00:29:19,560 --> 00:29:23,680
Speaker 1: you've suddenly got something as interesting to ignite the excitement

491
00:29:23,800 --> 00:29:27,320
Speaker 1: of the private sector today. The rate of return is

492
00:29:27,480 --> 00:29:29,520
Speaker 1: too low, too uncertain, too risky.

493
00:29:29,760 --> 00:29:32,840
Speaker 3: But there is already an organization, as I understand, called

494
00:29:32,920 --> 00:29:37,320
Speaker 3: TCX here in Europe that was funded by development agencies.

495
00:29:37,480 --> 00:29:42,000
Speaker 3: These are agencies that give money to developing countries for projects,

496
00:29:42,440 --> 00:29:45,480
Speaker 3: and it does currency risk hedging. Why do you think

497
00:29:45,760 --> 00:29:49,440
Speaker 3: you need a different institution? Couldn't DCX just be made

498
00:29:49,480 --> 00:29:54,000
Speaker 3: bigger and solve the problem. TCX finds you the market

499
00:29:54,040 --> 00:29:57,280
Speaker 3: hedging price. We're saying the market hedging price is wrong.

500
00:29:57,840 --> 00:30:01,120
Speaker 3: The market hedging price is an over payment for the risk,

501
00:30:01,640 --> 00:30:04,800
Speaker 3: an over payment by half. T six doesn't have the

502
00:30:05,560 --> 00:30:09,560
Speaker 3: capital or liquidity to basically say the market you're wrong.

503
00:30:09,880 --> 00:30:12,040
Speaker 3: I'm going to hang out here and offer you a

504
00:30:12,040 --> 00:30:15,600
Speaker 3: different exchange rate for billions of dollars of types of

505
00:30:15,640 --> 00:30:18,760
Speaker 3: projects that is four or five percent points per year

506
00:30:18,840 --> 00:30:21,200
Speaker 3: different than the market rate because I know that in

507
00:30:21,200 --> 00:30:25,160
Speaker 3: the long run, I'll be okay, And you're taking this risk.

508
00:30:25,320 --> 00:30:27,520
Speaker 3: The IMF and World Bank can do it because if

509
00:30:27,560 --> 00:30:29,720
Speaker 3: they get it right, they may even make a little

510
00:30:29,760 --> 00:30:31,960
Speaker 3: bit of money. They get it wrong, they've had a

511
00:30:32,040 --> 00:30:35,520
Speaker 3: huge social benefit and that is their actual remit and

512
00:30:35,520 --> 00:30:38,280
Speaker 3: their mandate. So if you succeed that, you create this

513
00:30:38,480 --> 00:30:41,800
Speaker 3: institution within the World Bank and the International Monetary Fund

514
00:30:42,320 --> 00:30:44,760
Speaker 3: that's a not for profit that does the currency has risk.

515
00:30:44,960 --> 00:30:50,240
Speaker 3: So now you're saying, suddenly, my investment in the solar

516
00:30:50,240 --> 00:30:55,160
Speaker 3: farm in South Africa becomes attractive compared to my investment

517
00:30:55,280 --> 00:30:57,840
Speaker 3: in a German solar farm, just because that five percent

518
00:30:57,880 --> 00:31:01,320
Speaker 3: has now been absorbed by this the embody that you've created.

519
00:31:01,880 --> 00:31:04,840
Speaker 3: How much money does that body need to have to

520
00:31:04,920 --> 00:31:08,280
Speaker 3: be able to manage this kind of currency hedge risk

521
00:31:08,360 --> 00:31:12,240
Speaker 3: in one hundred and fifty countries, which your class is

522
00:31:12,240 --> 00:31:13,880
Speaker 3: developing countries in the world today.

523
00:31:14,080 --> 00:31:18,800
Speaker 1: So if what we were suggesting was a subsidy, that

524
00:31:18,840 --> 00:31:23,240
Speaker 1: would limit its scale, because subsidies mean actually it's a

525
00:31:23,280 --> 00:31:27,560
Speaker 1: code word for grants, and grants are not unlimited. But

526
00:31:27,680 --> 00:31:30,680
Speaker 1: what we're saying is this is not a subsidy. This

527
00:31:30,760 --> 00:31:34,600
Speaker 1: is removing the overpayment. This is saying we want the

528
00:31:34,680 --> 00:31:37,920
Speaker 1: price of the risk to be equal to the actual

529
00:31:38,000 --> 00:31:41,520
Speaker 1: cost of the risk. At the moment, the price of

530
00:31:41,520 --> 00:31:45,840
Speaker 1: the risk is substantially bigger than the actual risk. And

531
00:31:45,920 --> 00:31:49,080
Speaker 1: so if I'm not doing something that is a subsidy,

532
00:31:49,120 --> 00:31:52,560
Speaker 1: it's not a grant, it actually is something in the

533
00:31:52,640 --> 00:31:58,240
Speaker 1: long run is profitable, then I can be unlimited in

534
00:31:58,240 --> 00:32:02,240
Speaker 1: my scale. I can scale up to the amount of

535
00:32:02,280 --> 00:32:05,800
Speaker 1: the investment the world needs, which is about one point

536
00:32:05,880 --> 00:32:09,000
Speaker 1: five trillion dollars per year of investment. They're not going

537
00:32:09,080 --> 00:32:12,000
Speaker 1: to need one point five trillion of hedging. But this

538
00:32:12,120 --> 00:32:14,920
Speaker 1: is a key point because there's always people out there

539
00:32:14,960 --> 00:32:19,360
Speaker 1: saying we want grants, we want subsidies, and one of

540
00:32:19,400 --> 00:32:24,800
Speaker 1: the messages we're saying, it's a typical bridge down is saying, yes,

541
00:32:25,000 --> 00:32:28,600
Speaker 1: that will be nice, but don't we want scale. We

542
00:32:28,680 --> 00:32:32,520
Speaker 1: need scale, And if you focus only on grants, only

543
00:32:32,560 --> 00:32:35,520
Speaker 1: on people transferring money to you, you're never going to

544
00:32:35,600 --> 00:32:38,560
Speaker 1: get the scale we need to save the planet. Let's

545
00:32:38,600 --> 00:32:40,800
Speaker 1: look at a few other solutions. In the set we

546
00:32:40,840 --> 00:32:44,240
Speaker 1: talked about the three buckets, and so you'll move money

547
00:32:44,240 --> 00:32:47,440
Speaker 1: through currency risk hedging that will allow private investors to.

548
00:32:47,400 --> 00:32:51,240
Speaker 3: Invest more money. You'll for adaptation, increase the amount that

549
00:32:51,280 --> 00:32:54,560
Speaker 3: could be lent and enable that lending to be paid

550
00:32:54,560 --> 00:32:57,040
Speaker 3: for through the savings that the countries will make, and

551
00:32:57,080 --> 00:32:59,880
Speaker 3: there may be some form of emissions tax to be

552
00:33:00,040 --> 00:33:03,120
Speaker 3: will do actually have a smaller amount of grunts given

553
00:33:03,160 --> 00:33:06,120
Speaker 3: for damages. But there are other things that you're proposing

554
00:33:06,160 --> 00:33:10,000
Speaker 3: that could also be very beneficial for countries. So one

555
00:33:10,040 --> 00:33:15,000
Speaker 3: thing is, for example, in Barbados, you introduce their unnatural

556
00:33:15,000 --> 00:33:18,360
Speaker 3: Disaster clause in some of your loans or debts that

557
00:33:18,400 --> 00:33:22,640
Speaker 3: you've taken on, and those trigger when a big catastrophe happens,

558
00:33:22,680 --> 00:33:25,400
Speaker 3: and then you don't have to make those repayments for

559
00:33:25,480 --> 00:33:30,320
Speaker 3: a period of time. You know, how does that help Barbados?

560
00:33:30,440 --> 00:33:33,080
Speaker 3: And can this be applied to other countries?

561
00:33:33,560 --> 00:33:36,560
Speaker 1: So you know, let's recap. We've got a world now

562
00:33:36,880 --> 00:33:42,480
Speaker 1: of that's facing these bigger, more frequent shocks. So we've

563
00:33:42,520 --> 00:33:47,080
Speaker 1: never had before climate related shocks, pandemic shocks, and that

564
00:33:47,200 --> 00:33:49,360
Speaker 1: was the mother of old shocks, right the last pandemic.

565
00:33:49,640 --> 00:33:52,239
Speaker 1: So the world is now facing more shocks. We've come

566
00:33:52,280 --> 00:33:54,720
Speaker 1: up with a way of trying to mitigate some of

567
00:33:54,760 --> 00:33:58,040
Speaker 1: those shocks, to reduce them, to adapt for them. And

568
00:33:58,080 --> 00:34:00,920
Speaker 1: to come up with lots of damage. But the system

569
00:34:01,800 --> 00:34:06,800
Speaker 1: just needs to be more shock absorbing because of this

570
00:34:07,280 --> 00:34:12,680
Speaker 1: changed world we're in and shock absorbing doesn't sound very exciting.

571
00:34:12,280 --> 00:34:15,800
Speaker 3: But yeah, well shock absorbing. Tried driving a car without

572
00:34:15,800 --> 00:34:18,239
Speaker 3: a shock absorber and you know what happens. So it's

573
00:34:18,520 --> 00:34:19,080
Speaker 3: very important.

574
00:34:19,200 --> 00:34:22,360
Speaker 1: It's very important. But it's particularly important for poor countries

575
00:34:22,520 --> 00:34:26,200
Speaker 1: and poor people. Poor people that often live on the edge.

576
00:34:26,239 --> 00:34:28,960
Speaker 1: They may appear to be fine, but it's one week's

577
00:34:29,280 --> 00:34:32,600
Speaker 1: without a job and suddenly they're plunged into poverty. Same

578
00:34:32,640 --> 00:34:35,600
Speaker 1: with countries. So if you're a rich country and you

579
00:34:35,640 --> 00:34:38,480
Speaker 1: have a shock, I mean, you can do quantitative easing,

580
00:34:38,920 --> 00:34:43,000
Speaker 1: print some cash, you can borrow some money. Poor countries

581
00:34:43,080 --> 00:34:45,520
Speaker 1: can't really do that. They don't have reserve currencies either,

582
00:34:45,640 --> 00:34:50,000
Speaker 1: so in a crisis, their currency plunges. In a crisis,

583
00:34:50,080 --> 00:34:54,120
Speaker 1: American and the European currencies go up, so they need

584
00:34:54,200 --> 00:34:57,160
Speaker 1: shock absorbers. So there are two types of shock absorbers.

585
00:34:57,160 --> 00:35:01,200
Speaker 1: There is the public sector shock absorber. The International multi

586
00:35:01,200 --> 00:35:04,040
Speaker 1: Fund should behave a little bit like a lender of

587
00:35:04,160 --> 00:35:07,040
Speaker 1: last resort, the way a center bank behaves for its

588
00:35:07,080 --> 00:35:09,760
Speaker 1: local banks. We need the IMF to be like a

589
00:35:09,760 --> 00:35:13,080
Speaker 1: center bank for the world, and it should offer when

590
00:35:13,120 --> 00:35:17,880
Speaker 1: as a crisis, a facility where you can get emergency, cheap,

591
00:35:18,040 --> 00:35:23,280
Speaker 1: quick money. It's limited, but it's quick. Secondly, because international

592
00:35:23,320 --> 00:35:26,279
Speaker 1: capital markets are bigger than the IMF could ever be,

593
00:35:27,120 --> 00:35:30,560
Speaker 1: we need to look at the financial instruments that the

594
00:35:30,560 --> 00:35:35,520
Speaker 1: world has, especially the debt instruments. So we have. We

595
00:35:35,520 --> 00:35:41,040
Speaker 1: weren't the first. The Caribbean has pioneered natural disaster clauses

596
00:35:41,080 --> 00:35:44,160
Speaker 1: in bonds. Grenadians and Kits were the first. We are

597
00:35:44,239 --> 00:35:49,120
Speaker 1: the world's largest issuer of sovereign bonds with natural disaster

598
00:35:49,200 --> 00:35:53,480
Speaker 1: clauses in them. So these are clauses which says, if

599
00:35:53,520 --> 00:35:58,279
Speaker 1: an independent entity has declared that you have had a

600
00:35:58,440 --> 00:36:02,560
Speaker 1: major national disaster, a hurricane or something else, then for

601
00:36:02,719 --> 00:36:06,279
Speaker 1: two years, all of your debt servicing that means your

602
00:36:06,360 --> 00:36:10,920
Speaker 1: interest payments, your repayment of the debt that's suspended for

603
00:36:10,960 --> 00:36:14,040
Speaker 1: two years. You get this breathing space for which you

604
00:36:14,080 --> 00:36:17,480
Speaker 1: can focus on the disaster, and then all of that

605
00:36:17,560 --> 00:36:21,160
Speaker 1: debt service that was suspended is added back on. At

606
00:36:21,200 --> 00:36:24,719
Speaker 1: the end of the instruments. The instrument becomes automatically two

607
00:36:24,800 --> 00:36:27,719
Speaker 1: years longer, and you've got to pay some interest that

608
00:36:27,880 --> 00:36:30,040
Speaker 1: for that period of time, which was the same as

609
00:36:30,040 --> 00:36:34,560
Speaker 1: the interest beforehand, And so it provides you liquidity. It's

610
00:36:34,600 --> 00:36:39,279
Speaker 1: not free money, it's liquidity. It's reshuffling the payments to

611
00:36:39,400 --> 00:36:42,360
Speaker 1: give you the breathing space when you need it. The creditor,

612
00:36:42,840 --> 00:36:45,600
Speaker 1: the person who lent you the money, is no worse off.

613
00:36:45,719 --> 00:36:48,960
Speaker 1: They get all their payments back plus interest, but they

614
00:36:49,080 --> 00:36:52,840
Speaker 1: just have they've allowed a different shift in the timing,

615
00:36:53,320 --> 00:36:56,520
Speaker 1: and that's so important for dealing with the crisis. Nobody

616
00:36:56,600 --> 00:36:59,279
Speaker 1: gives us the amount of liquidity that we would get

617
00:36:59,320 --> 00:37:03,600
Speaker 1: from these instrums. If a disaster hit s Barbados. This

618
00:37:04,440 --> 00:37:08,680
Speaker 1: saves us eighteen percent of our GDP one eight percent

619
00:37:08,719 --> 00:37:13,719
Speaker 1: of our GDP. All the other multilateral development banks put

620
00:37:13,760 --> 00:37:17,600
Speaker 1: together offer us all kinds of contingency lending. They come

621
00:37:17,680 --> 00:37:22,000
Speaker 1: up to about two percent. So this really is a

622
00:37:22,040 --> 00:37:25,760
Speaker 1: life changer. If every developing country had them during the pandemic,

623
00:37:25,840 --> 00:37:30,160
Speaker 1: for example, it would have given them one trillion dollars

624
00:37:30,200 --> 00:37:33,239
Speaker 1: of liquidity to deal with the pandemic. In the end,

625
00:37:33,560 --> 00:37:37,680
Speaker 1: development countries, because they had no liquidity and no ability

626
00:37:37,719 --> 00:37:40,879
Speaker 1: to get extra cash, they only spent all of them

627
00:37:41,440 --> 00:37:44,759
Speaker 1: half a trillion on the health crisis. This would have

628
00:37:44,800 --> 00:37:47,400
Speaker 1: given them one trillion. They could have spent twice as much.

629
00:37:47,880 --> 00:37:51,879
Speaker 3: These institutions, the World Bank and the IMF, were created

630
00:37:52,440 --> 00:37:55,120
Speaker 3: decades ago at a time that was very, very different

631
00:37:55,160 --> 00:37:58,840
Speaker 3: from today. You've said, in effect that from the conception

632
00:37:59,040 --> 00:38:02,919
Speaker 3: there were fundamental problems with these institutions. There have been

633
00:38:03,160 --> 00:38:06,800
Speaker 3: many attempts to try and reform them, and small changes

634
00:38:06,840 --> 00:38:09,600
Speaker 3: have been made. But why do you think this time

635
00:38:09,640 --> 00:38:12,760
Speaker 3: around they will change.

636
00:38:12,960 --> 00:38:15,759
Speaker 1: I think we have a moment today. I'm not sure

637
00:38:15,840 --> 00:38:19,720
Speaker 1: exactly why that is. I think Bridgetown has helped to

638
00:38:19,920 --> 00:38:23,640
Speaker 1: create that moment, but many other things have. The enormous

639
00:38:23,680 --> 00:38:30,080
Speaker 1: tragedy of Pakistan last year, thirty million people homeless, twenty

640
00:38:30,200 --> 00:38:35,359
Speaker 1: seven thousand schools underwater. I think the heat waves and

641
00:38:35,440 --> 00:38:39,080
Speaker 1: the flooding in Europe and America has helped to create

642
00:38:39,080 --> 00:38:42,680
Speaker 1: that moment. I think the nature of the current US

643
00:38:42,719 --> 00:38:47,400
Speaker 1: administration European governments. We've had a US Treasury secretary saying

644
00:38:47,800 --> 00:38:50,120
Speaker 1: we need to go from billions to trillions. Well, to

645
00:38:50,160 --> 00:38:53,600
Speaker 1: be quite frank, we've never had a US Treasury secretary

646
00:38:53,680 --> 00:38:59,400
Speaker 1: say that before. I think also, the system is broken,

647
00:39:00,480 --> 00:39:05,320
Speaker 1: and it's clear that if we don't fix it, somebody

648
00:39:05,320 --> 00:39:09,520
Speaker 1: else will replace it. You know, we've fumbled along with

649
00:39:09,600 --> 00:39:15,760
Speaker 1: a forty system for a long time. But now they're alternatives,

650
00:39:16,400 --> 00:39:20,560
Speaker 1: and people are presenting alternatives, and we are seeing that

651
00:39:20,640 --> 00:39:25,040
Speaker 1: what was previously an open trading system, governments are championing

652
00:39:25,040 --> 00:39:29,320
Speaker 1: an alternative trading system. You're seeing that happening with debt.

653
00:39:29,440 --> 00:39:33,720
Speaker 1: We've got a global debt restructuring process that is being changed.

654
00:39:33,960 --> 00:39:38,440
Speaker 1: It's different. So I think people realized that the stakes

655
00:39:39,040 --> 00:39:42,600
Speaker 1: are bigger than ever before, which is that this system,

656
00:39:42,960 --> 00:39:47,239
Speaker 1: if it's not fixed, will just be brushed away as irrelevant.

657
00:39:48,200 --> 00:39:51,279
Speaker 1: And at the core of the system our institutions established

658
00:39:51,760 --> 00:39:55,879
Speaker 1: around nineteen forty five now the world. In nineteen forty five,

659
00:39:56,360 --> 00:40:00,200
Speaker 1: the European Empires were still largely intact. India and get

660
00:40:00,200 --> 00:40:03,960
Speaker 1: its independence until a few years later, So the vast

661
00:40:03,960 --> 00:40:08,320
Speaker 1: majority of countries today did not exist back in nineteen

662
00:40:08,360 --> 00:40:11,279
Speaker 1: forty five. And in nineteen forty five, the problem was

663
00:40:11,360 --> 00:40:15,640
Speaker 1: rebuilding Europe after the war, the idea of climate change,

664
00:40:16,080 --> 00:40:21,880
Speaker 1: of pandemics, of inequality, those things were not forefront in

665
00:40:21,960 --> 00:40:26,040
Speaker 1: their agenda. They've evolved over time and they've become much

666
00:40:26,080 --> 00:40:30,440
Speaker 1: more focused on poverty in the poorest countries. But the

667
00:40:30,480 --> 00:40:34,239
Speaker 1: world is also evolved. We need to fix the system,

668
00:40:34,400 --> 00:40:37,800
Speaker 1: and we need to change its focus and its remit

669
00:40:38,239 --> 00:40:41,640
Speaker 1: and most importantly, we need to scale it up. It

670
00:40:41,719 --> 00:40:46,040
Speaker 1: is so tiny it is irrelevant. It is irrelevant today.

671
00:40:46,480 --> 00:40:49,040
Speaker 1: We need to say, the total all of the multilateral

672
00:40:49,040 --> 00:40:52,680
Speaker 1: debump banks put together lend about one hundred billion dollars.

673
00:40:52,760 --> 00:40:55,040
Speaker 1: Remember the figure we used at the beginning. We need

674
00:40:55,040 --> 00:40:57,560
Speaker 1: two point four trillion dollars. We need to get that

675
00:40:57,680 --> 00:41:00,640
Speaker 1: lending up from one hundred billion to four hundred or

676
00:41:00,719 --> 00:41:03,480
Speaker 1: five hundred billion. We need to scale it up.

677
00:41:03,640 --> 00:41:06,880
Speaker 3: Who is presenting alternatives to the World Bank and IMF

678
00:41:07,040 --> 00:41:09,360
Speaker 3: that could brush these institutions aside.

679
00:41:09,480 --> 00:41:15,680
Speaker 1: The international system is being replaced, not by a grand plan,

680
00:41:17,239 --> 00:41:23,319
Speaker 1: but being chipped away. So today it's irrelevant. Today when

681
00:41:23,320 --> 00:41:27,399
Speaker 1: people want investment, you've got the War Bank, but you've

682
00:41:27,400 --> 00:41:30,040
Speaker 1: got a number of other people coming to you offering money,

683
00:41:31,640 --> 00:41:33,240
Speaker 1: offering money on good terms.

684
00:41:34,120 --> 00:41:36,239
Speaker 3: I mean, Ash doesn't say it, but the elephant in

685
00:41:36,280 --> 00:41:39,560
Speaker 3: the room is China. Since twenty fifteen, China has offered

686
00:41:39,600 --> 00:41:42,880
Speaker 3: one hundred and eighty five billion dollars in assistance to

687
00:41:42,960 --> 00:41:48,520
Speaker 3: countries in debt distress, including Argentina, Pakistan and Nigeria. That's

688
00:41:48,520 --> 00:41:51,720
Speaker 3: according to a study by AID Data. Over the past decade,

689
00:41:51,840 --> 00:41:54,680
Speaker 3: China's overseas bailouts are more than twenty percent of the

690
00:41:54,719 --> 00:41:58,160
Speaker 3: total lending of the IMF, and the amounts are growing,

691
00:41:58,640 --> 00:42:02,160
Speaker 3: providing an alternative so of money to countries that need it.

692
00:42:02,960 --> 00:42:06,080
Speaker 1: You've got a so called Paris Club system of debt

693
00:42:06,320 --> 00:42:10,239
Speaker 1: rescheduling and restructuring, but you've got other people offering debt

694
00:42:10,280 --> 00:42:11,239
Speaker 1: and restructuring it.

695
00:42:11,920 --> 00:42:12,640
Speaker 4: You have a.

696
00:42:12,640 --> 00:42:17,000
Speaker 1: System that is being chipped away because it's irrelevant. So

697
00:42:17,040 --> 00:42:21,120
Speaker 1: if we want to have an international system with international

698
00:42:21,200 --> 00:42:24,880
Speaker 1: rules that is multilateral, it has to work. If developing

699
00:42:24,920 --> 00:42:27,520
Speaker 1: countries feel it's irrelevant to them, that they don't have

700
00:42:27,560 --> 00:42:31,759
Speaker 1: a voice, that it is not suited to their challenges

701
00:42:31,760 --> 00:42:34,840
Speaker 1: and issues, they will listen to anybody else.

702
00:42:35,120 --> 00:42:37,400
Speaker 3: What do the leaders of the World Bank we have

703
00:42:37,480 --> 00:42:41,960
Speaker 3: a new one in Ajabanga, and the IMF Crystallina Georgieva

704
00:42:42,239 --> 00:42:45,040
Speaker 3: think off the bridge down to point zero a gender.

705
00:42:45,400 --> 00:42:48,960
Speaker 1: Both of it have expressed support for the Bridgetown initiative.

706
00:42:49,440 --> 00:42:53,120
Speaker 1: Our job is to make their job easier. They will

707
00:42:53,160 --> 00:42:58,000
Speaker 1: say that they lead institutions that have shareholders who drive policy,

708
00:42:58,400 --> 00:43:02,720
Speaker 1: and we've been focused on influencing the shareholders.

709
00:43:02,400 --> 00:43:06,080
Speaker 3: And other shareholders are essentially the largest economies with the

710
00:43:06,160 --> 00:43:09,800
Speaker 3: largest amount of shareholding. Roughly speaking, Yes.

711
00:43:09,840 --> 00:43:14,200
Speaker 1: The shareholding framework was set back in nineteen forty five

712
00:43:14,600 --> 00:43:19,200
Speaker 1: and it is based as heavily skewed towards the Europe

713
00:43:19,239 --> 00:43:24,000
Speaker 1: and the United States, and they're quite protective of their

714
00:43:24,040 --> 00:43:27,239
Speaker 1: shareholdings and don't wish them to form. But I think

715
00:43:27,680 --> 00:43:29,960
Speaker 1: it's important to say that one of the reasons why

716
00:43:30,000 --> 00:43:32,120
Speaker 1: we have a moment today is we have a leadership

717
00:43:32,400 --> 00:43:36,640
Speaker 1: of the two main institutions who I think want to

718
00:43:36,719 --> 00:43:42,080
Speaker 1: make sure their institutions are more relevant and more relevant

719
00:43:42,080 --> 00:43:44,320
Speaker 1: to today's new problems.

720
00:43:46,960 --> 00:43:49,960
Speaker 3: Thank you so much. This is a very important topic,

721
00:43:50,080 --> 00:43:53,920
Speaker 3: very complicated topic, but without it you cannot break the deadlock.

722
00:43:54,080 --> 00:43:57,560
Speaker 3: And I'm really glad to have explored those solution sets

723
00:43:57,560 --> 00:43:58,160
Speaker 3: with you today.

724
00:43:58,480 --> 00:44:00,000
Speaker 1: Thank you.

725
00:44:06,480 --> 00:44:08,680
Speaker 3: Thanks for listening to Zero. If you like the show,

726
00:44:08,760 --> 00:44:12,200
Speaker 3: please rate, review, and subscribe on Apple Podcasts or Spotify.

727
00:44:12,680 --> 00:44:15,040
Speaker 3: If you enjoyed this week's episode, please share it with

728
00:44:15,080 --> 00:44:17,960
Speaker 3: a friend or someone who's planning a trip to the Caribbean.

729
00:44:18,719 --> 00:44:20,800
Speaker 3: If you've got a suggestion for a guest or topic,

730
00:44:20,920 --> 00:44:23,279
Speaker 3: or something you just want us to look into. Get

731
00:44:23,320 --> 00:44:26,360
Speaker 3: in touch at zero Pod at Bloomberg dot Net. Zero's

732
00:44:26,400 --> 00:44:29,840
Speaker 3: producer is Oscar Boyd and senior producer is Christine Driskell.

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00:44:30,160 --> 00:44:33,279
Speaker 3: Our theme music is by Wondering. Special thanks this week

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00:44:33,280 --> 00:44:37,560
Speaker 3: to Kate McKenzie and Kira Bindram. I'm Makshatrati back next

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00:44:37,600 --> 00:44:37,839
Speaker 3: week