2023-10-11 21:59:14
He World Bank (WB), and the Uruguayan government Negotiations on a loan that incorporates the possibility of reducing interest if the country meets climate objectives have concluded.
This Wednesday, the Minister of Economy, Azucena Arbeleche, and the multilateral organization issued a joint statement from Morocco, where the spring meeting of the WB and the IMF is taking place.
The agreement will reward, for the first time, with a significant reduction in the interest rate the fulfillment of climate objectives associated with the commitments assumed in the Paris Agreement.
The statement, released this Wednesday by the World Bank, points out that “this could result in an interest reduction of up to US$ 12.5 million “if Uruguay achieves its objectives to reduce the intensity of methane emissions in its livestock sector.”
The document adds that Uruguay will be the first country to benefit from this financial feature, and the World Bank will seek to replicate and scale this approach to encourage countries to generate global public goods.
“This financial innovation is aligned with the World Bank’s Roadmap for Evolution that seeks to create incentives for countries striving to integrate global challenges such as climate change mitigation into their development strategies, as we work to end the Poverty on a habitable planet the statement says.
The details of the agreement with the World Bank
The loan includes a mechanism that enables a discount in the interest rate if the objectives of reducing the intensity of methane emissions in beef production are exceeded by one percentage point.
There is the possibility that the US$ 12.5 million will increase with the contribution of resources from developed countries, in case Uruguay reaches the 2030 goal early.
To achieve the stated objectives, the experience of the program will be scaled nationally. Livestock and Climate, expanding it to various livestock systems, with the primary objective of improving productive efficiency, environmental sustainability and the economic return of producers. To finance this program in its initial stage, the World Bank committed to providing non-refundable resources once the loan was approved, according to the MEF.
Additionally, potential interest reductions from this loan would also be used for this program, as well as other environmental projects.
“The approval of this loan instrument is another innovative step by the country in the search for better conditions of access to international financing. As important as this, it seeks to enhance Uruguay’s positioning in agricultural export markets, which increasingly value sustainable production,” said Arbeleche.
“The indicators included in this loan, and in the environmental bond issued in 2022, demonstrate Uruguay’s determination and ambition to follow a development path that combines greater growth and productivity in the livestock sector, an integral part of the country’s economic structure. with a commitment to non-deforestation of the native forest,” he added.
In April of this year and in her role as president of the IMF/WB Development Committee, Minister Arbeleche had advocated for multilateral loans that would differentiate loan conditions based on the countries’ contribution to global public goods.
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