A Washington, D.C.-based emerging markets specialist and Asia Times columnist, Gary N. Kleiman, is proposing an idea on how to finance relief efforts for Europe’s widening migrant crisis: sovereign refugee bonds.
Kleiman makes the case for the bonds in the Financial Times’s beyondbrics blog on Thursday. He argues that the funding model — which relies on governments backed by private donations — has never kept pace with the displacement debacle that the UN says is now affecting 60 million people worldwide, 80 percent of which are from developing countries.
He proposes that financial markets, both debt and equity, could be mobilized for emerging economy frontline states to provide a new, long-term source to fund the urgent infrastructure and social needs of displaced people.
Sovereign refugee bonds would be a logical start, Kleiman says, building on existing investor local and foreign-currency portfolios across emerging market regions, and bond issues could carry partial guarantees from the World Bank and other development lenders.
These frontline countries are all included in emerging and frontier financial markets and structures could be found to tap global investors otherwise overlooked as a durable crisis funding solution, Kleiman says.
Middle and lower-income economies most affected, working with a dedicated task force of banks and fund managers, should pioneer landmark financial market approaches to meet the unprecedented tragedy, Kleiman says.