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World Bank Urges Support For Green Sukuk Financing Scheme

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… Pledges $1bn assistance for Indonesia

Vice President and Treasurer of the World Bank, Arunma Oteh has said Green Sukuk financing scheme is promising for green projects.

Speaking at the International Monetary Fund-World Bank Annual Meetings in Indonesia, Oteh said the world is now focusing on projects that are based on sustainability.

“If governments have full commitment to protect the environment, many international investors would come to invest,” adding that, therefore, the emergence of Green Sukuk could be an alternative financing scheme for green projects,’’ she said.

Earlier, Indonesia at the ceremony introduced Green Sukuk, an Islamic bond used for financing environmentally friendly projects. Indonesia Finance Minister Sri Mulyani Indrawati expressed confidence that the financing scheme, which is based on Islamic teachings, would have a significant role in contributing to sustainable development.

“Our challenge is how to carry out development that is in line with sustainable principles,” the minister said  at the ceremony  titled “Green Finance for Sustainable Development”.

She revealed that, in March, the Indonesian government issued Green Sukuk as an instrument to collect US$1.25 billion in funds to finance environmentally friendly projects.

Meanwhile, the World Bank has also announced funding of up to $1 billion for the Government of Indonesia to supplement relief and reconstruction efforts in the disaster-affected areas of Lombok and Sulawesi, and to bolster long-term resilience.

The World Bank in a statement said the funding will be available on request by the government adding that it would be guided by a US$5 million grant for technical assistance for detailed planning to ensure reconstruction is resilient and community-led.

“On Friday I visited the city of Palu in Sulawesi with His Excellency Vice President Kalla. It is humbling to see the devastation and hear the stories of those who have been affected”, said World Bank Chief Executive Officer, Kristalina Georgieva. “The Government’s immediate relief efforts are robust and impressive. As we enter the reconstruction phase we are making up to $1 billion of comprehensive support available for Indonesia. The best memorial to those who lost their lives is build back better.”

The World Bank package could include cash transfers to the poorest 150,000 affected families for a period between 6 months to one year. This augmentation of existing social protection systems is designed to support the local economy and employment during the recovery phase and to avoid long-term damage to human capital.

The proposed $1 billion package could also include a new standalone emergency recovery program to finance rebuilding of critical public facilities and infrastructure assets: hospitals, schools, bridges, roads, highways, water supply infrastructure. It would also strengthen monitoring and early warning systems, and help to finance the reconstruction of housing settlements and neighborhood level infrastructure and services.

 

 


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