Wednesday, November 30, 2022

G7 leaders unveil $600 billion plan to rival China’s Belt and Road Initiative in developing countries

The initiative will be geared towards tackling climate change, improving global health, achieving gender equality and building digital infrastructure.

The initiative will be geared towards tackling climate change, improving global health, achieving gender equality and building digital infrastructure.

US President Joe Biden and other G7 leaders have raised a $600 billion fund by 2027 to deliver transparent and game-changing infrastructure projects in developing countries like India, in a move seen as counter to China’s Belt and Road Initiative. ambitious plans have been unveiled.

The Partnership for Global Infrastructure and Investment (PGII) was unveiled on Sunday in Elmau during the G7 summit, relaunching a plan unveiled at last year’s G7 talks in England.

President Biden said the plan would deliver returns for all.

“Today, the G7 nations launched the Partnership for Global Infrastructure and Investment (PGII),” Mr Biden said.

“Collectively, we aim to raise approximately USD 600 billion from the G7 by 2027 to invest in critical infrastructure that improves the lives of all our people and delivers real benefits,” he tweeted.

Mr. Biden tweeted, “Let me be clear – the announcement of the G7’s new global infrastructure partnership is not an aid or donation. It is an investment that will deliver returns for everyone, including the American people, and boost all our economies.” ” ,

Chinese President Xi Jinping’s multi-trillion-dollar Belt and Road Initiative (BRI) has been criticized for overburdening many developing countries.

The PGII has been commended for countering China’s ambitious BRI. Launched by President Xi in 2013, BRI provides financing to emerging countries to build infrastructure such as ports, roads and bridges.

While it has developed trade ties, it has also been criticized as a means of providing “predatory loans”, whereby debt-ridden countries such as Sri Lanka have to hand over major assets if they fail to meet their debt repayments. .

The PGII plan will allow countries to “see the tangible benefits of partnering with democracies”, Mr Biden said.

He added that PGII will “raise strategic investments in areas critical to sustainable development and our shared global security.” The White House said in a fact sheet that the US will raise hundreds of billions of dollars and provide quality, sustainable infrastructure that will transform lives around the world, strengthen and diversify supply chains, and create new opportunities for American workers. and businesses, and advances our national security.

It said President Biden will announce that the US aims to raise $200 billion for PGII over the next 5 years by leveraging grants, federal funding and private sector investment.

“With the G7 partners, we aim to raise $600 billion in global infrastructure investment by 2027. And this is only the beginning. The United States and its G7 partners raise additional capital from other like-minded partners, multilateral development banks , Development Finance Institute, Sovereign Wealth Fund, and many more,” it said.

On India, the White House fact sheet said the US International Development Finance Corporation (DFC) will invest up to USD 30 million in Omnivore Agritech and Climate Sustainability Fund 3, an impact venture capital fund that aims to build the future of agriculture, food. Invests in entrepreneurs. Systems, climate and rural economy in India.

It said the fund seeks to invest in companies that enhance food security and promote both climate resilience and climate adaptation in India, as well as improve the profitability and agricultural productivity of small-holding farms. The fund is aiming to reach its target capitalization of US$65 million for the first time in September 2022 and $130 million last in 2023. Through this investment, DFC expects to raise $30 million in private capital, the fact sheet stated.

Internationally, infrastructure has long been underfunded, with an estimated need in the developing world exceeding $40 trillion – a need that will only increase with the climate crisis and population growth. According to the Memorandum on Partnership for Global Infrastructure and Investment issued by the White House, many low- and middle-income countries do not have adequate access to high-quality financing that meets their long-term infrastructure investment needs.

The BBC reported that the US has pledged to raise a total of $200 billion through grants, federal funds and private investment, while the European Union has announced another 300 billion euros.

The initiative will be geared towards tackling climate change, improving global health, achieving gender equality and building digital infrastructure.

European Commission President Ursula von der Leyen said the aim of the latest project was to “present a positive powerful investment impulse to the world to show our partners in the developing world that they have a choice”.

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