The UAE has pledged $200 million to assist climate resilience efforts in vulnerable countries.
This commitment is in the form of SDRs allocated to the IMF’s Resilience and Sustainability Trust (RST).
SDRs are a stable asset, tied to a basket of five currencies – the US Dollar, the Euro, the Chinese Renminbi, the Japanese Yen, and the British Pound Sterling – allowing IMF members to exchange them for a freely usable currency. Established in 2022, the RST aims to aid low and middle-income economies and vulnerable nations in confronting long-term climate change risks.
“The UAE is delighted to announce our Special Drawing Rights (SDRs) commitment to the IMF Resilience and Sustainability Trust (RST),” said COP28 President Dr. Sultan Al Jaber. “We are committed to supporting those countries and communities who have often contributed the least to climate change but are impacted the most.”
Concessional financing comprises loans with terms more favourable than those available in debt markets. This can involve low (below market rate) interest rates, providing the recipient with a grace period, or deferred loan repayment.
Approximately three-quarters of the IMF’s member countries qualify for RST financing. This includes low-income members, middle-income countries, and small island developing states (SIDS). The RST has received over $40 billion in SDR pledges, with 11 countries approved as recipients thus far.
“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,” said HE Mohamed Hadi Al Hussaini, Minister of State for Financial Affairs. “We work closely with partners from international financial organizations, such as the IMF, to enhance multilateral coordination in sustainable finance action.”
