Financing a Green Recovery in Mauritius: Challenges and Opportunities
COVID-19 has caused financial strain on government spending and tax revenues in Mauritius, leading to increased public sector debt and non-performing loans in financial institutions. This has limited the availability of finance for green recovery initiatives amidst the pressing need to address climate-related disasters and meet climate goals. The budget for 2020-2021 includes investments in green and blue economy projects, emphasizing the importance of transitioning to renewable energy sources. Public and private green finance mechanisms are crucial for driving sustainable development in Mauritius.
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Financing a Green Recovery in Mauritius- Critical Juncture or Missed Opportunity? This Photo by Unknown Author is licensed under CC BY-SA
Fiscal Chain Effect of COVID-19 COVID-19 has created financial pressure on govt spending and tax revenues Fiscal Pressure Public sector debt is increasing Lending Pressure Financial Institutions (FIs) balance sheets are aggravating with non performing loans (NPL) Balance sheet Pressure Supply Side Pressure Increased govt debt and FIs NPL, this leaves less room for supply of finance Green recovery The need for it?
The need for Financing a Green Recovery COVID-19 is testing our resilience in responding to potential climate-related disasters. Countries commitments to 2030 climate goals collectively fall short of what is needed to shift towards a pathway consistent with carbon neutrality. In addition, the identification of detailed strategies to achieve these goals and the implementation of policies have been lacking. The pandemic has interrupted global supply chains, including those for renewable energy projects, which could delay or obstruct their completion (PV Magazine, 2020).
Financing a Green Recovery Carbon Pricing Tools Green Budgeting Green Fiscal Policies
Public vs Private Green Finance in Mauritius Budget 2020-2021 for Mauritius (Extract) Green Finance Instruments and Level of Awareness Rs 100 Billion in this Budget for our Plan de Relance de L Investissement et de l Economie. Source: Authors go back to basics with investment in smart agriculture diversify and deepen the blue economy value-chain National Agri-Food Development Programme. This programme will promote the Farm to Fork concept, ensure food security and reduce our dependence on imports. Green and Blue Bond frameworks by the Bank of Mauritius. proposing to transfer Rs 2 billion to the National Environment Fund through an Estimates of Supplementary Expenditure in this fiscal year. Rs 215 Million will be used for the protection of our beaches, lagoons and coral reefs. And Rs 207 Million will be provided for the Cleaning and Embellishment Programme of drains, roads, rivers and public sites including places of worship. Rs 1.2 billion will be provided from the National Environment Fund to construct drainage infrastructure in high risk flood-prone areas across Mauritius and Rodrigues. This is why we need to increase the share of local renewable energy in our energy mix to 40% by 2030.
Green Budgeting as recovery measure Green Budgeting Exercise: public expenditure can be identified which contributes to either mitigation of or adaptation to climate change, as well as to the fight against artificialization of land and to the protection of biodiversity. Green Budgeting Framework Green budget tagging Classifying budget measures according to their environmental and/or climate impact Environmental impact assessments Requiring environmental impact assessments to accompany new budget measures. Ecosystem services, including carbon, pricing Putting a price on environmental externalities, such as greenhouse gas emissions, often through taxes and emissions trading systems, to facilitate each achievement of national environmental and climate goals. Green perspective to spending review Incorporating consideration of the impact of measures on national environmental and climate goals alongside considerations of efficiency. Green perspective in performance setting Integrating performance objectives related to national environmental and climate goals.
Tools for reporting how stimulus packages help meet green objectives A general green budget statement: This summarises in broad narrative terms how measures introduced in the budget are intended to support green priorities and goals. A green progress statement: This provides a more detailed explanation of how the budget measures advance the government s green agenda, by reference to established objectives and indicators. Distributional impact analysis: This is an assessment of how specific green measures (both revenue and expenditure) affect individuals, households or firms
Private Climate Finance for Mauritius International Transfer of Mitigation Outcomes Implementation of Carbon Tax Mobilising Private Climate Finance Policies Private Adaptation Finance Private Climate Finance Article 6 of PA Natural Disasters Insurance Sustainable Banking Standards Climate Risks Stress Testing on projects to be financed Green and Blue Bonds Bilateral Climate Protection Agreement
Research- Investigating the Private Climate Finance Mechanisms in SIDs. (NDC Finance Fellowship Programme- Frankfurt School of Finance and Management) Research questions: Research Methodology: 1. Exploratory research : i.e the case of 9 SIDs have been selected. Interviews with key stakeholders in Financial Institutions shall be mainly performed through personal meetings in the over the phone or video conference. What are the mechanisms being adopted for flow of private climate finance? 2. Document Analysis: three types of information collected such as articles, reports and websites. What are the drivers and challenges of providers and users of climate finance? Coun try Seyc helle s Mauri tius Com oros Singa pore Mal dive s Cab o ver de Sao Tom e and Princ ipe 0 Guin ea- Bissa u Bahr ain Sources of Information Sources of Information Articl es Web site Repo rts 3 2 0 6 3 0 0 0 How is reporting and accountability of private climate finance being adopted? 71 10 14 9 6 4 4 8 5 2 43 15 9 8 4 5 8 6 4 1 0 Articles ReportsWebsites
