Africa-Press – Eritrea. Emerging economies need much more private financing for climate transition, according to the International Monetary Fund (IMF) on Monday.
“Achieving the transition to net-zero emissions by 2050 requires substantial climate mitigation investment in emerging market and developing economies, which currently emit around two-thirds of greenhouse gases,” it said in a statement.
“These countries will need about $2 trillion annually by 2030 to reach that ambitious goal, according to the International Energy Agency, with the majority of that funding flowing into the energy industry. This is a fivefold increase from the current $400 billion of climate investments planned over the next seven years,” it added.
The IMF, however, noted that it expects growth in public investment will be limited, thus the private sector will need to make a major contribution toward the large climate investment needs for emerging markets and developing economies.
The private sector will be required to supply around 80% of the required investment, while this share increases to 90% when China is excluded, according to the financial institution.
“While China and other larger emerging economies have the necessary domestic financial resources, many other countries are missing sufficiently developed financial markets that can deliver large amounts of private finance,” the statement said.
The IMF also stressed that attracting international investors faces hurdles, as most emerging market economies and developing countries lack the investment grade credit ratings that institutional investors often require, while few investors are able to take the higher risk.
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