BAKU, Azerbaijan, March 12. International financial institutions (IFIs) such as the International Monetary Fund and the World Bank can play an important role in reducing developing countries' debts and supporting climate projects, said Ismail Serageldin, co-chairman of the Nizami Ganjavi International Center (NGIC) and former Vice President of the World Bank, Trend reports.
Speaking at a press conference dedicated to the XII Global Baku Forum, Serageldin shared his insights.
He emphasized that one of the possible solutions to the debt problem of developing countries is to use the mechanism of exchanging debt obligations for financing climate projects through escrow accounts.
"International financial institutions can provide guarantees for the private sector to stimulate investments in projects that would otherwise be considered too risky in challenging countries. Private investors often do not trust local governments or the local currency, but international guarantees can play a decisive role in attracting them," he noted.
Serageldin also pointed out that the pot of private financial assets under management is roughly $470 trillion across the globe.
According to him, it is entirely possible to attract $1–2 trillion for climate projects if the private sector can be convinced to invest in these initiatives.
"For this, international agencies can play the role of catalysts, stabilizing the debt burden and helping private investors enter the markets of developing countries,” he added.
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