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‘Missed opportunity’ for Canada at summit on climate reform of developing world loans

Foreign-aid and climate advocates say Ottawa needs to do much more to help developing countries brace for climate chaos without going broke, after Canada’s uninspiring contribution to a summit last month that aimed at reforming global finance.

Foreign-aid and climate advocates say Ottawa needs to do much more to help developing countries brace for climate chaos without going broke, after Canada’s uninspiring contribution to a summit last month that aimed at reforming global finance.

French President Emmanuel Macron hosted the summit in Paris, convening leaders from Africa and small island states, along with rich countries and financial institutions.

The New Global Financing Pact was intended to start transforming the systems developing countries use to take on debt, seek bailouts and pay off loans, such as through the World Bank and the International Monetary Fund.

The meeting came as countries across the developing world face devastating natural disasters, pandemics and inflation that have made them unable to pay back loans, with little funding left to fulfil their pledges to protect biodiversity.

Caroline Brouillette, the head of Climate Action Network Canada, said the multilateral development banks aren’t working in the face of “converging climate and debt crises.”

“Lending more money just further fuels that cycle of debt,” Brouillette said.

The federal Liberal government says it supports the reform of international financial institutions and Foreign Affairs Minister Mélanie Joly highlighted the issue to the United Nations General Assembly last September.

Prime Minister Justin Trudeau also co-chairs a United Nations group advocating for the Sustainable Development Goals along with Barbadoes Prime Minister Mia Mottley. The pair have been pushing for international financing reform to help Caribbean states facing rising sea levels and increasingly severe storms.

But advocates say Ottawa has not shown how it plans to push for financing system reforms, and they noticed Canada’s comparatively low-profile presence at Macron’s summit last month.

Attendees included Macron and Mottley, who co-hosted the event, German Chancellor Olaf Scholz, European Commission President Ursula von der Leyen and U.S. Treasury Secretary Janet Yellen.

Canada sent International Development Minister Harjit Sajjan to Paris, instead of Trudeau, Joly or Finance Minister Chrystia Freeland.

“The message I kept hearing from my colleagues from civil society across the world, including from the Global South itself, was, ‘Where is Prime Minister Justin Trudeau?’” Brouillette said.

“The political signal of sending a head of state says something about the level of importance that is accorded to an issue.”

She said she was also puzzled that Canada wasn’t a signatory to a joint letter calling for global financing reform, published in The Guardian newspaper ahead of the summit.

The letter was signed by U.S. President Joe Biden, as well as the leaders of South Africa, Brazil, Senegal and all G7 countries except Italy and Canada. The signatories are part of the steering committee that worked together to launch the summit, which Canada was not involved in either.

The letter said developing countries should be able to see economic growth while lowering carbon emissions, instead of being left to face the brunt of climate change.

Canada did publish a similar op-ed in the same newspaper with New Zealand and Australia, but it was signed by Environment Minister Steven Guilbeault, not Trudeau.

The summit ended with a drafted statement and relatively small pockets of financing from various countries. From Canada, there was $50 million for a program aimed at attracting financing projects helping women and minorities in Latin America and the Caribbean.

Jean-François Tardif, a researcher with Results Canada, said he was hoping Canada would have announced something in Paris about the actual topic at hand, which is the reform of multilateral develop banks.

“It was a missed opportunity,” said Tardif.

A Global Affairs Canada news release said that while in Paris, Sajjan raised the need for “a new feminist financial architecture” and a mix of public and private investment to reverse the backsliding on the Sustainable Development Goals.

Guilbeault’s office noted in a statement Ottawa’s ongoing work on biodiversity and multilateral work to secure US$100 billion in financing for climate initiatives.

Tardif noted Canada was among the first countries to push for multilateral development banks to repackage unused loans on their balance sheets in order to get more money flowing to countries in need.

It also was also among the first to re-appropriate a one-time IMF asset used to finance COVID-19 vaccines, known as special drawing rights, and divert it to poorer countries.

That move has allowed countries with limited foreign reserves to take out more loans. However, Ottawa has diverted three times as much of this currency for Ukraine as it has for Africa, Asia, Latin America and the Caribbean combined, according to an analysis by the ONE Campaign.

Tardif says countries like Canada could divert more of these untapped reserves and push for debt-suspension clauses, which would cost little but help developing countries get back to making progress on fighting extreme poverty.

“Canada needs to continue that leadership, and not just sit on its laurels,” he said

Both Tardif and Brouillette are hoping countries pledge more cash and especially financial reforms, at a series of upcoming conferences.

Finance ministers and central-bank governors from G20 countries will meet in India next week, while the Green Climate Fund will have its replenishment conference in October.

“We’re not trying to reshuffle the chairs on the Titanic deck. It’s about more money, so that the Titanic floats,” Tardif said.

“Either Canada will actually be there as part of the leading pack that sets us on the road to a sustainable future — or we’ll be the ones that will hope for the best, and hope somebody else takes the leadership.”