The main adviser of the Debt Management Unit pointed out that the instrument marks a course in climate action policy.
Within the framework of the Sustainable Uruguay Expo, organized by the Ministry of Environment (MA), the senior adviser to the Debt Management Unit (UGD) of the Ministry of Economy and Finance (MEF), Victoria Busciostressed that the sovereign bond “green“linked to sustainability that issued Uruguay in 2022 made it possible to align the country’s debt management strategy with the environmental commitment assumed in the Paris Agreement.
For Buscio, the design and implementation of the financial instrument was about “a momentous step” to integrate the objectives that the country maintains in terms of the environment with the State’s own financing. Likewise, he appreciated that this action marks a course in regards to the country’s climate action.
Along these lines, he indicated that the inter-ministerial work was key to finalizing the issuance of the bond, since the MEF worked together with the MA, the Ministry of Livestock, Agriculture and fishing (MGAP), he Ministry of Industry, Energy and Mining (MIEM), and also had the support of the Ministry of Foreign Affairs (MRREE).
“This instrument was well received by the international financial community“, since “they support the need to introduce more financial instruments of this type, especially in emerging countries,” explained Buscio.
“The country is converting the objectives of the Nationally Determined Contributions (NDC for its acronym in English) that are not binding and are aspirational, into financially binding commitments, “something that results”a great commitment for an emerging country like Uruguay“, according to Buscio.
Uruguay seeks to materialize an international credit tied to climate indicators
“On May 31 of this year, the first report was published, complying on time and with the guidelines,” Buscio said. The UGD adviser commented that “the financial instrument introduced an innovative two-way interest rate structure“, where Uruguay could benefit from an interest rate reduction in the case of over-compliance with its environmental goals.
The MEF official recalled that the current government administration is working “together” with the main multilateral credit organizations to “develop a loan linked to climate change indicators“, which would have the same logic as the green bond, but scalable and replicable to other countries, and which can also be applied by financial institutions to local companies.
Source: Ambito
