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Europe

No green and digital transition without “first generation” reforms

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THE Morocco is in the exclusive club of countries that have been able to access the Resilience and Sustainability Facility of International Monetary Fund (IMF). Through this mechanism, the Kingdom therefore obtained a loan of 1.3 billion dollars. ” This funding comes at the right time, especially since the country must face the multiple risks linked to climate change », says the Minister of Equipment and Water, Nizar Baraka during a conference-debate on the theme “invigorating growth and shaping transformations in emerging markets and developing economies”, on October 12 in Marrakech as part of the IMF-World Bank annual meetings. According to the minister, the effects of climate change are now perceptible in Morocco. One of its effects is the rarefaction of water resources.

sea ​​water desalinationTHE Wastewaterthere decarbonization of industry and port infrastructure and the outcome of the National Strategy for Sustainable Development (SNDD).

All of these strategies must also be implemented in the different regions of the Kingdom, taking into consideration the specificities of each one as well as the degree of its exposure to risks. The other challenge, according to Nizar Baraka, is to consolidate the growth to generatejob. “But this growth must be sustainable and take into account the challenges linked to the environment,” explains the minister.

Amer BisatGlobal Head of Emerging Markets Fixed Income at BlackRockwho participated in the debate, indicated that the financing capacity of the public sector of the green transition is limited and cannot therefore achieve optimal levels of growth in emerging countries. ” THE private sector must make its contribution to financing the green transition in emerging countries,” underlines Bisat who believes that green bonds constitute an opportunity for financing the green transition in emerging markets. Except that their volume still remains low in his eyes.

According to data from the international firm Mazars, the global market for green bonds has experienced strong growth in recent years, recording growth of 75% between 2016 and 2018 with an issuance volume of $175 billion. One of the novelties of this market lies in the issuance of securities by a multitude of non-public actors, in particular non-financial companies. Also, it is expected that the market will remain driven mainly by European issues responding to the additional need for investments in Europe of 180 billion euros per year in order to achieve by 2030 the objectives set out by the EU during L’Paris agreement.

Bisat also places great emphasis on strengthening public-private partnership to combat the effects of climate change. To attract investors in emerging markets, the manager at BlackRock recommends going back to basics. In other words, foster a conducive investment environment that guarantees return on investment to attract investors. “A challenge that Morocco is meeting by carrying out strategic structural reforms,” underlines Bisat.

This environment conducive to return on investment can only be ensured if the countries concerned carry out first generation reforms, continues Antoinette M. Sayeh, Deputy Managing Director of the IMF. The head of the Bretton Woods Institution takes the reasoning a little further, arguing that green reforms and first generation reforms must be combined to trigger solid growth. In fact, she explains, green reforms cannot succeed without prerequisites which are the first generation reforms. These are just as important to also operate the digital transition in the emerging countries. Because, explains AM Sayeh, to trigger a real digital transformation, it is essential to first invest in the electricity production and distribution infrastructure. Without this, the IT infrastructure that will support the digital transition will not be able to function. Its conclusion, the first generation reform is a determining prerequisite for operating the green and digital transitions.



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