Economist: Green Financing Commitments Must Become Productive Investment

Jakarta (ANTARA) - M Rizal Taufikurahman, an economist at the Institute for Development of Economics and Finance (INDEF), said the government must ensure that green-transition financing commitments discussed during the annual meetings of the International Monetary Fund (IMF) and World Bank are realised as productive investment.

Rizal said the government should prioritise resolving various investment obstacles, from inadequate project readiness and regulatory uncertainty to high financing risks.

“Following the IMF–World Bank meetings, the government must ensure green financing commitments are transformed into productive investment, rather than merely a diplomatic achievement,” he told ANTARA in Jakarta on Friday.

He said the challenge of accelerating the green transition was not only a lack of funding, but also the government’s ability to prepare projects that are financially viable and attractive to investors.

He cited the implementation of the Just Energy Transition Partnership (JETP), which has highlighted the continuing gap between international financing commitments and funding actually delivered on the ground.

To address this, the government should strengthen blended-finance schemes, provide risk-guarantee instruments and increase private capital’s involvement in financing the energy transition.

These measures should also take fiscal capacity into account, so that accelerating green investment does not place additional pressure on state finances.

Evaluations should also consider investment realised, job creation, increased industrial value added and reductions in carbon emissions.

“Without structural reform, green financing risks being large in terms of commitments but making only a limited contribution to economic growth,” he said.