Nature loss and climate change pose an increasingly urgent threat to prosperity and wellbeing. Responding to these unfolding crises will require substantial investment in all countries, and particularly in emerging market and developing countries (EMDCs). Yet at this crucial moment, capital has actually been flowing out of EMDCs, primarily as a result of the slowdown in growth in the advanced economies alongside persistently high inflation.
Recent months have seen a notable deterioration in the international environment of trade, investment and interest rates, and aid flows have been cut. The issues discussed in this report have therefore become even more urgent. EMDCs will need purposeful and integrated strategies to mobilize all affordable finance sources and deploy them according to their complementary strengths. But even with stronger efforts to mobilize domestic resources and create an enabling environment, many EMDCs will not be able to unlock the investment they need without urgent action to address existing pressures on their sovereign debt. Some are facing insolvency, while many are grappling with illiquidity.
In our Interim Report, we articulated how, for a growing number of countries, the debt, climate and nature crises are coming together in a ‘vicious circle’.
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