Policy Updates

On May 30, 2025, GGF and Sida have formed a partnership to expand green lending in the Western Balkans and the EU’s Eastern Neighborhood. Sida has issued an unfunded guarantee of EUR60 million (US$65million), enabling GGF to provide EUR120 million (US$130 million) in loans to private businesses and households through financial intermediaries and direct company lending.

This support targets urgent investments in decarbonization, renewable energy, and energy efficiency. The partnership marks GGF’s first risk-sharing guarantee, enhancing its ability to back green initiatives and prepare financial institutions and businesses for upcoming EU market opportunities.

GGF was initiated as a public-private partnership by EIB and KfW, with backing from the EU, Germany’s BMZ, and other international investors. Sida’s involvement bridges the investment gap in high-risk markets and complements Swedish ODA and EU programs.

This collaboration is a major milestone for green finance in Southeast Europe, the Caucasus, Middle East, and North Africa, supporting sustainable energy solutions and emissions reduction.

On May 30, 2025, JICA signed the Development Policy Loan which provides JPY60 billion (US$393 million) with Bangladesh to support economic reforms and climate resilience, bolstering Bangladesh's economy amid global challenges like inflation and climate-induced disasters.

The 30-year loan, with a 2% annual interest rate and a 10-year grace period, aims to improve the business environment and governance, and implement climate measures. Co-financing includes US$600 million from the ADB and US$500 million from the World Bank.

Additionally, the Human Resource Development Scholarship Project grants JPY606 million (US$4million) to fund advanced degrees for young Bangladeshi officials in Japan, enhancing administrative capacity and bilateral ties.

On May 27, 2025, Norway formalized an agreement with Estonia under the EEA and Norway Grants, allocating EUR72 million (US$77 million) to support Estonia’s social and economic development. Norway will contribute 97% of the funding, with Iceland and Liechtenstein providing the remainder.

The initiative focuses on several priority areas, including the green transition, crisis prevention, health, and business development. It also aims to enhance Estonia’s physical and digital infrastructure, particularly for preserving cultural heritage during crises. Norwegian agencies such as the Directorate for Civil Protection and Innovation Norway will partner with Estonia to implement projects in energy efficiency, sustainable fisheries, and genetic medicine.

This agreement underscores Norway’s commitment to reducing social and economic disparities in Europe while fostering stronger bilateral ties with Estonia.

On May 27, 2025, the UK FCDO celebrated milestones of the LSAP in Belize, funded under the UKCIF, where the UK US$32million to the Coastal Road Upgrading Project aimed at boosting economic resilience and creating sustainable livelihood opportunities in Gales Point and Mullins River villages.

Achievements include formalizing 80 MSMEs, surpassing the target of 40. Of these, 43 are female-owned and 37 male-owned. Additionally, 72 participants received entrepreneurial development training, with 59 earning certification. A Buy Belizean exhibition featuring 14 MSMEs is scheduled for June 14, 2025, in Dangriga Town.

The initiative reflects a strong commitment to inclusive economic development, job creation, and community empowerment, showcasing the deep engagement of local communities and the success of UK -Belize partnerships.

On May 27, 2025, BOND highlighted the UK government's opportunity to address global debt challenges as a countermeasure to the ODA cuts which are set to drop to 0.3% of GNI by 2027, and urged action on debt to mitigate the impacts of reduced funding and growing climate and development crises.

The organization emphasized the UK’s pivotal role, given its jurisdiction over sovereign debt contracts, and proposed reforms like a UN debt framework convention and improved transparency. It also advocated for legislative updates to compel private creditor participation in debt relief and measures to prevent liquidity crises in LICs.

BOND underscored that action on debt could restore fiscal space for developing nations, enabling investments in social services, climate adaptation, and economic development, while reinforcing the UK’s global leadership and commitment to poverty reduction.

On May 22, 2025, Norway and the UNDP signed a framework agreement to develop a Renewable Energy Master Plan for Syria led by Norway’s Minister of International Development Åsmund Aukrust and UNDP Resident Representative Sudipto Mukerjee, which aims to address Syria’s energy crisis by promoting sustainable energy solutions.

The 12-month plan will outline Syria’s future energy needs, the role of renewable sources, and key measures like aligning regulations with international standards and creating a robust legal framework. Priority areas include improving energy access, reducing import dependency, fostering economic growth through job creation, and minimizing greenhouse gas emissions.

Integrated with Syria’s National Electricity Master Plan, the project will assess renewable energy potential, enhance energy efficiency, and develop technical capacity in renewable technologies. This collaboration underscores Norway and UNDP’s commitment to advancing Syria’s recovery and sustainable energy transformation while addressing climate challenges.

On May 16, 2025, Italian Minister of Environment and Energy Security Gilberto Pichetto Fratin announced the renewal and expansion of Italy's financial commitment to the Youth4Climate initiative at the Turin International Book Fair 2025, this renewed funding will support 50 new youth-led climate actions globally through the 2025 Call for Solutions.

Co-led by the Italian Ministry of Environment and Energy Security and the UNDP, Youth4Climate has already supported over 100 projects in developing economies such as India and Colombia. The initiative also features a digital platform with over 25,000 young climate leaders, offering learning and collaboration opportunities.

Youth4Climate is recognized internationally, including in the 2024 G7 Leaders’ Communiqué, as a model for youth engagement in climate policy. As the world prepares for COP30 in Brazil, the initiative exemplifies intergenerational cooperation and Italy’s commitment to fostering innovative, youth-driven climate solutions.

On May 16, 2025, the KOICA and Tajikistan signed agreements for two ODA projects totaling US$19 million which aim to enhance agricultural resilience to climate change in the Rudaki and Hisor regions.

The first project, valued at US$11 million, focuses on modernizing irrigation systems in Rudaki by upgrading pumping stations and providing essential equipment like excavators and bulldozers. This project is expected to benefit over 30,000 residents by improving water access for farming.

The second project, with an investment of US$8 million, will establish smart greenhouse farming infrastructure in Hisor. By introducing advanced Korean greenhouse technology, the initiative aims to support 3,000 farming households, enabling year-round cultivation and boosting agricultural productivity.

These projects highlight KOICA’s commitment to addressing climate challenges and supporting sustainable agricultural practices in Tajikistan.

On April 25, 2025, the German Development Minister Svenja Schulze stressed the need to strengthen multilateral cooperation to address climate change, conflict, and inequality at the World Bank Spring Meetings, reaffirming Germany's commitment to the World Bank's reform agenda, including increased focus on climate resilience, poverty reduction, and gender equality.

Schulze pledged continued German support for the IDA , and backed the ongoing reform to enhance its financial capacity through innovative tools such as hybrid capital and portfolio guarantees, emphasizing that global challenges require joint, reliable funding efforts.

She called for expanded partnerships between the World Bank, other multilateral development banks, and private sector actors to mobilize more resources for global development goals. Schulze also highlighted the need to integrate climate action and social protection into its core mission without losing focus on poverty reduction.

On April 9, 2025, the CDU/ CSU and SPD parties in Germany finalized their coalition treaty, where Chancellor-designate Friedrich Merz, Bavarian Minister-President Markus Söder, and SPD Co-Chairs Lars Klingbeil and Saskia Esken presented an agreement that focuses on Germany’s global leadership, economic modernization, and migration control.

Key highlights include:

• BMZ remaining independent: The BMZ will retain its independent status, with Minister Svenja Schulze expected to continue her leadership. This decision reflects advocacy efforts from various stakeholders and ensures BMZ’s role in Germany’s development policy;
• ODA target revised: For the first time in 30 years, the 0.7% ODA/ GNI target has been excluded from the coalition treaty. Instead, the treaty calls for reducing the ODA quota to consolidate the federal budget. Germany’s ODA contribution was 0.82% of GNI in 2023 but saw a EUR940 million (US$1 billion) cut to BMZ ’s budget in 2024. Voluntary contributions to international organizations are also set to decrease;
• A new development policy approach: The treaty outlines a shift toward aligning development policy with Germany’s geopolitical and economic interests. It calls for consolidating development-related responsibilities under BMZ leadership, potentially including initiatives like the International Climate Initiative, currently housed in the BMWK;
• Strengthened inter-ministerial cooperation: The treaty emphasises better coordination across BMZ, the AA, and the BMVg to improve policy coherence and align development efforts with strategic objectives;
• Commitment to sovereign debt and tax systems: The treaty reaffirms support for resolving sovereign debt crises and strengthening tax systems in developing countries, aligning technical and financial cooperation with European development policy; and
• The climate sections remaining unchanged: The climate sections remain consistent with earlier drafts, with a focus on domestic action over international initiatives.

This coalition treaty signals a strategic pivot in Germany’s development policy, prioritizing geopolitical alignment and fiscal consolidation.