The UAE announced during the World Climate Action Summit (WCAS) that it is pledging USD $200 million for climate resilience in vulnerable countries.
This follows a previous pledge of USD $200 million to support development in low-income countries earlier this year in Marrakech.
The commitment comes in the form of Special Drawing Rights (SDRs), pledged to IMF’s Resilience and Sustainability Trust (RST), a trust held by the International Monetary Fund (IMF)..
COP28 President Dr. Sultan Al Jaber, said: “The UAE is delighted to announce our SDR commitment to the IMF Resilience and Sustainability Trust (RST). We are committed to supporting those countries and communities who have often contributed most to climate change but are impacted the most.”
COP28 President Dr. Sultan Al Jaber, said: “The UAE is delighted to announce our SDR commitment to the IMF Resilience and Sustainability Trust (RST). We are committed to supporting those countries and communities who have often contributed the least to climate change but are impacted the most.”
His Excellency Mohamed Hadi Al Hussaini, Minister of State for Financial Affairs, commented: “The UAE’s allocation of funds to the Resilience and Sustainability Trust is a testament to our commitment to advancing sustainable finance efforts and supporting countries most affected by climate change. The Ministry of Finance in the UAE prioritizes identifying climate financing gaps, assessing the impact of climate change mitigation policies on capital flows, and recognizing the macroeconomic risks resulting from climate change. We work closely with our partners from international financial organizations, such as the IMF, to enhance multilateral coordination in sustainable finance action.”
SDRs are a stable asset, pegged against a basket of five currencies – the US Dollar, the Euro, The Chinese Reminbi, the Japanese Yen, and The British Pound Sterling – which IMF members can exchange for a freely usable currency when needed.
Concessional financing represents loans on “more favourable terms than the borrower could obtain in the debt markets.”
This either relates to terms where the loan has low (below market rate) interest rates, or the recipient is granted a grace period or deferred repayment of the loan.
Approximately three-quarters of the IMF’s country membership is eligible for RST financing, including low-income members as well as middle-income countries and small island developing states (SIDS).
Currently, the RST has received over USD 40 billion to SDR pledges and 11 countries have been approved as recipients so far.