Statement from Civil Society Organizations of Nepal

Say NO to ‘climate loan’

18 February 2011


Adverse impacts of global warming and subsequent climate change are already been apparent with an increase in frequency and intensity of climate induced extreme events. People’s lives and livelihoods, especially of poor and marginalized social groups such as farmers, indigenous communities, women and children in least developed countries and developing nations are most at risks and vulnerable to these disasters. These nations contribute negligibly to the global green house gas emissions but are least able to cope with and are the most vulnerable to climate- related risks and hazards. For example, Nepal has contributed to the world green house gases emission by only 0.025% but is ranked fourth vulnerable country among the170 countries from the impacts of climate change.

Accordingly, the United Nations Framework Convention on Climate Change (UNFCCC) realized the need to support the countries least able to cope with adverse impacts of climate change, in which developed nations have agreed to support least developed and developing nations to adapt to the adverse impacts of climate change. In the Conference of Parties (COP) meetings of UNFCCC, least developed countries Least Developed Countries
LDC
A notion defined by the UN on the following criteria: low per capita income, poor human resources and little diversification in the economy. The list includes 49 countries at present, the most recent addition being Senegal in July 2000. 30 years ago there were only 25 LDC.
including Nepal has been strongly advocating for the direct access of the recipient countries to the climate finance. For which, climate finance should be within the United Nations regime, and must be separated from and in addition to the Overseas Development Assistance (ODA ODA
Official Development Assistance
Official Development Assistance is the name given to loans granted in financially favourable conditions by the public bodies of the industrialized countries. A loan has only to be agreed at a lower rate of interest than going market rates (a concessionary loan) to be considered as aid, even if it is then repaid to the last cent by the borrowing country. Tied bilateral loans (which oblige the borrowing country to buy products or services from the lending country) and debt cancellation are also counted as part of ODA. Apart from food aid, there are three main ways of using these funds: rural development, infrastructures and non-project aid (financing budget deficits or the balance of payments). The latter increases continually. This aid is made “conditional” upon reduction of the public deficit, privatization, environmental “good behaviour”, care of the very poor, democratization, etc. These conditions are laid down by the main governments of the North, the World Bank and the IMF. The aid goes through three channels: multilateral aid, bilateral aid and the NGOs.
). More importantly to internalize ‘Polluter Pay Principle’ any financial support on adaptation and mitigation must be in grants and NEVER IN LOAN.

Referring to the current ongoing discussions on climate finance and climate justice, Nepal is one of the recipient countries of the World Bank World Bank
WB
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

funded ‘Pilot Program for Climate Resilience (PPCR)’ programme. Of the total USD 110 million, USD 50 million is in the form of grant and USD 60 million is a loan offer. In relation to this funding negotiation, we are concerned about the willingness of the Government of Nepal to accept the loan. Contrary to its position, we urge the Government of Nepal to stand by with its positions on climate finance and NOT TO ACCEPT ANY LOAN ON CLIMATE CHANGE. We also oppose the World Bank on pledging of loan for adaptation and resilience to the nations that needs immediate financial support to adapt to adverse effect of climate change. This is intended to devalue and defame the ongoing climate funding process under the UNFCCC mechanism.

The Government of Nepal, recognizing the Nepalese peoples’ rights and sentiments, and its position in international negotiation on behalf of least developed countries group, must consider the following points while agreeing on any decisions related to loan on climate change.

a.NO LOAN for climate related activities. All the climate finances for the countries of the South must be in the reparation mode.

b.Protect human rights and the environment:
The financing of climate related activities must not violate human rights and social justice. Accountability and responsibility
Climate change is mainly caused by developed world. Least developed Countries are the only sufferers. There is no strong logic for the developed world to support these countries through loan. It is unfair and unacceptable to offer loan and overlook UNFCCC mechanism.

c. Respect the climate change policy 2067
Climate Change Policy 2067 recently endorsed by the Government of Nepal has internalized Climate Justice as its essence. The policy internalizes the polluters’ pay principle payment of ecosystem services as a mechanism of generating internal resources on adaptation. It also aims to comply with the national and international commitments that the Government of Nepal is advocating for. The Government must respect and comply with its own national policy.

d.Burden to Nepal
The average annual ratio of debt servicing to GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
is 2.7 percent but average annual growth rate of total debt servicing is 15.9 percent and total outstanding debt to GDP is nearly 58.76 percent. With different grace periods of various loans ending up, this loan amount will add extra burden to the government and Nepalese citizens to repay the loan amount. This is unjust to the people of Nepal who are already overburdened by debt and hence vulnerable to climate-induced risks.

e.Adaptation and resilience are very much interlinked
We raised our concerns on how the government is advocating PPCR is for ‘climate resilience not for adaptation’ to justify loan. We strongly believe that the government should not be misguided with technical jargons and try to interpret the language at its own ease.

f.Accept only grant amount and best utilize in productive sectors
Loan is loan either it be concessional or in any other forms. We urge government of Nepal to accept only the grant amount and effectively utilize this in productive sectors. Government of Nepal should lobby Lobby
Lobbies
A lobby is an entity organized to represent and defend the interests of a specific group by exerting pressure or influence on persons or institutions that hold power. Lobbying consists in conducting actions aimed at influencing, directly or indirectly, the drafting, application or interpretation of legislative measures, standards, regulations and more generally any intervention or decision by the Public Authorities.
with the World Bank to convert the loan into grant without any condition attached with it. Moreover, since the international financing modalities on climate change is not clear and most likely that the country like Nepal will benefit more in the future. Nepal should not go for loan option in climate change and donors and World Bank should not offer the loan. The grant amount at this moment is enough. We again reiterate to begin with the grant amount.

This has been duly signed on 13th February 2011 by:
- NGO Federation of Nepal, Dr. Netra Prasad Timsina
- Federation of Community Forestry Users Nepal, (FECOFUN), Mrs. Apsara Chapagain
- Global Alliance for Community Forestry (GACF), Mr. Ghan Shyam Pandey
- Irrigation Water Users Federation, Nepal, Mr. Ram Lakhan Harijan
- Federation of Drinking Water and Sanitation Users, Nepal, Mr. Rajendra Aryal
Jagaran Nepal. Mrs. Sharmila Karki
- Women in Policy Advocacy Alliance- Tej Kumari Tiwari
- NGO Group on Climate Change, Mr. Keshav Thapa
- Forest Action Nepal, Dr. Naya S Paudel
- Campaign for Climate Justice, Nepal (CCJN), Dr. Sarba Raj Khadka
- National Association of Community Electricity Users – Nepal (NACEUN), Mr. Dilli Ghimire
- Rural Enterprise Developers (RED) Group Nepal, Mr. Suhrid Prasad Chapagain

On behalf of signatories
…………………………….
Netra Prasad Timsina
President
NGO Federation of Nepal



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