Slow disbursement of money from the Guyana REDD+ Investment Fund (GRIF) has seen a role being developed for the Inter-American Development Bank (IDB) to intermediate funds under the Guyana-Norway forests partnership.
It is not clear what impact this will have on the role of the World Bank, which was invited by Guyana and Norway to act as Trustee of the GRIF and is responsible for providing financial intermediary services to the GRIF. Slow disbursements from the GRIF had continually earned the ire of former president Bharrat Jagdeo, who several times had lambasted the World Bank for the situation.
The GRIF channels REDD-plus financial support from Norway and other potential contributors to the implementation of Guyana’s Low Carbon Development Strategy (LCDS). Pending the creation of an international REDD+ mechanism, the GRIF represents an effort to create an innovative climate finance mechanism, which balances national sovereignty over investment priorities with ensuring that REDD+ funds adhere to globally accepted financial, environmental and social safeguards.
Oslo on Friday announced that it will contribute US$45 million to the GRIF bringing the total contributions from Oslo under the Norway-Guyana climate and forest partnership to a total of US$115 million since 2009.
Following the announcement, several documents relating to the partnership were released, including a revised Joint Concept Note (JCN). The JCN constitutes the overarching framework for taking the Guyana-Norway cooperation forward and sets out how Norway is providing, and will continue to provide, financial support to Guyana, based on Guyana’s delivery of results as measured, and independently verified or assessed, against two sets of indicators: REDD+ Performance Indicators and Indicators of Enabling Activities. Norway has committed to providing up to US$250 million to Guyana up to 2015 based on Guyana’s efforts to protect its forest in the battle against climate change.
‘Slower than expected’
The new JCN noted that under the partnership, the GRIF has experienced “significantly slower than anticipated progress,” although important lessons have been learned. “The two Governments recognize the need for disbursements from the GRIF into Guyana’s economy and relevant LCDS and REDD+ investments to strengthen the effectiveness of REDD+ as an intrinsic part of Guyana’s sustainable development,” the JCN says.
“As such, work is being undertaken to allow for a more flexible, fit-for-purpose financial mechanism that would ensure the application of internationally recognized safeguards while allowing for stronger Guyanese ownership. As part of this, a pilot for an IDB role as Financial and Safeguards Intermediary is being developed, with the goal of it being operational in the first half of 2013,” it said.
“The proposed role for the IDB as Fiduciary Safeguards Intermediary will ensure compliance with IDB’s fiduciary, environmental and social safeguards for simpler projects. If proven suitable for the implementation of a range of GoG–activities it can also be useful to the further development of Guyana’s domestic institutional capability,” the document says.
“It is hoped that by 2015, the financial mechanisms of the partnership can be used as examples of interim flexible climate financing instruments, which allow for rapid approval of projects and stronger national ownership, while at the same time applying internationally recognized (in this case IDB) standards for fiduciary, environmental and social safeguards,” it added.
The document says that subject to IDB decision-making processes, the IDB Financial and Safeguards Intermediary role will be operational in the first half of 2013. “By the end of 2013, an outline strategy will be prepared setting out how the interim financial mechanisms could in the future be transitioned into national systems once mutually agreed benchmarks for independent assessment of financial, social and environmental safeguards are met. This could form part of a submission into the UNFCCC process, as a contribution to global efforts to design effective REDD+ finance mechanisms,” it added.
When the agreement was inked, it was noted that the GRIF is an interim solution for channeling climate finance to Guyana – designed for the Guyana-Norway Partnership up to 2015 – pending the transfer of payment intermediation and associated processes to Guyana’s national systems. This will be done when it is possible to specify how independent verification of Guyana’s adherence to globally accepted financial, environmental and social safeguards can be implemented. This will draw on UNFCCC and other relevant guidance.
Until such time as national systems can be used, the World Bank was invited to act as Trustee and is responsible for providing financial intermediary services to the GRIF.
The Trustee receives payments for forest climate services provided by Guyana and transfers these payments and any investment income earned on these payments, net of any administrative costs, to Partner Entities, for projects and activities that support the implementation of Guyana’s LCDS. Transfer of funds takes place on approval by the GRIF Steering Committee, which consists of Guyana and Norway, with observers from Partner Entities, as well as Guyanese and Norwegian civil society.
Partner Entities provide operational services for the approved LCDS investments, and apply their own globally accepted operational procedures and safeguards. As of December 2012, Guyana and Norway have approved as Partner Entities the IDB, the World Bank and the United Nations Development Pro-gramme.
