Even as rich and poor governments take stock of battered finances, inflation is pushing central banks toward higher interest rates and a tightening of monetary policy which, for the indebted, can only make the math less favorable. That means higher borrowing costs, higher interest burdens for the government and for the real sectors.
Over the medium term, the issue is all about finding the resources to fund climate goals and most countries are extremely behind on that, Institute of International Finance experts added, pointing at the need of rapid decarbonization of the global economy to avert a climate crisis.
Easing the reliance on carbon-based fuels and mitigating climate damage is expected to require massive public and private investment - on order of $90 trillion by 2030, according to one World Bank estimate.
At this point there's no global plan for how to underwrite it, and governments' share of climate investments will have to compete with social, health and other spending priorities set to intensify because of demographic trends like ageing populations.