The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, has stated that climate change is a major threat to growth and prosperity.
According to the IMF boss, there is the need to mobilize to prevent the climate crises even in the midst of the COVID crisis. She noted that, macroeconomic policies are central to the fight against climate change.
She said this whilst speaking at the ‘Coalition of Finance Ministers for Climate Action’ Ministerial Meeting on October 12, 2020.
“…the evidence is clear: climate change is a profound threat to growth and prosperity. It is macro-critical”.
She pointed out that, the important role played by macroeconomic policies in the fight against climate change put Finance Ministers, and the Bretton Woods institutions in the front row of climate discussion.
She stated that, in the latest World Economic Outlook, the IMF show how policy tools can pave a road toward net zero emissions by 2050 even as the world seeks to recover from the COVID-19 crisis.
She further noted that, the IMF showed how these policies can be pursued in a manner that supports economic growth, employment and income equality.
“First, we are seeing unprecedented policy support – some $12 trillion since the start of the crisis – and countries should ensure that stimulus is targeted towards green investments.
“In the first 15 years of the recovery, this green infrastructure push can boost global GDP by about 0.7 percent on average and create millions of jobs.
“Second, carbon pricing should be at the heart of this strategy, as recognized in Helsinki Principle number 3”.
She however cautioned that even though the economic rationale of carbon pricing is known, it is critical to get the implementation right, which include the need to shield vulnerable people and sectors to ensure a just transition.
“I fear that the current Paris framework is not going to deliver the needed reduction of emissions by 25-50 percent in the next 10 years.
“So, I am calling for the negotiations to be supported by agreement among the top emitting parties to adopt a carbon price floor”.
“With this price floor covering the majority of global emissions, it would provide clear forward guidance and a solid foundation on which to build global consensus on action to achieve the common goal”.
She further stated that, there is the need to recognize that the climate crisis is already upon us so as to adapt and build resilience to climate shocks. She noted that the IMF is working with its members especially the most vulnerable countries to do exactly that.
She charged the finance ministers to act with urgency to address the issue of climate change so that society can reap the benefits in the near future.
“Let me conclude. Let’s not forget this is the Coalition of Finance Ministers for Climate Action – so we must deliver. We must all act today for a better tomorrow”.
