Many barriers to climate funding in Sri Lanka
View(s):The slowness in Sri Lanka’s debt restructuring process and its country rating are seen as barriers to attracting foreign funding – especially for climate action.
Additionally, analysts point out that there are risks associated with the certainty of policy, the sanctity of contracts, and the assurance of demand growth for these projects. These concerns are particularly relevant when considering the attraction of funding for sovereign or private green projects. Climate activists argue that funding should prioritise regions in need for maximum impact. “South Asia is the least integrated of regions for attracting climate financing. Money is not coming to the places that need the most,” Climate Policy Initiative India Director Dhruba Purkayastha said.
Recent data shows that as of last year, multilateral development banks’ total global climate finance was at US$446.9 million, while the South Asian region received just $59.3 million since 2011. A study on the relationship between climate finance and climate risk evidence from the South Asian region showed that these banks provide 77 per cent and 23 per cent of the money for mitigation and application areas, but the increase in global climate financing after the pandemic was not seen in the South Asian region.
Analysts said that there is an opportunity for solar investments with climate change for businesses on climate action mitigation. But impact investors are eyeing larger projects to fund. On the other hand, investors claim that Sri Lankan projects have smaller investment requirements, which may not align with their current appetite for larger-scale projects. “Sri Lanka not having an adequate ticket size is a barrier for the deployment of such impact funds,” JB Securities Managing Director Murtaza Jafferjee said.
Impact investors are mostly interested in commercially viable projects that could deliver significant sustainability benefits, including agroforestry, waste treatment, and other initiatives that promote a circular economy, analysts said noting the importance of close collaboration between government agencies, donors, and bilateral and multilateral interventions in identifying the needs of the public and private sectors.
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