Opening Remarks at the 2020 International Conference on Sustainable Development

IMF News, September 21, 2020

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The COVID-19 pandemic is described as "a crisis like no other" that "does not stop at borders."
Coordinated, international strategies are asserted to be more effective than unilateral action.
Multilateralism is argued to be weakening and yet urgently needed to address cross-border health and economic spillovers.

Developing countries face a "perfect storm" of external shocks: falling exports, sharp capital outflows, lower receipts from remittances, and lower tourism earnings.
Fiscal response capacity gap (exact figures preserved):
- Advanced economies boosted fiscal spending by almost 9 percentage points of GDP.
- Emerging economies boosted their spending by 4 percent.
- Developing countries were, on average, able to make only 2 percentage points of GDP available.
Consequences and needs:
- "This is simply not enough to cover their immediate needs."
- Inadequate policy response risks lasting damage and makes achieving the 2030 Sustainable Development Goals more difficult.
- National actions (raising taxes efficiently and equitably; allocating spending appropriately), stepped-up bilateral assistance, and greater involvement from civil society and the private sector are needed.
- Multilateral institutions have key roles in project financing, meeting international liquidity needs, and assisting with debt restructuring where required.

Two complementary needs: adaptation (investments and economic adjustments) and mitigation (collective behavioral and policy changes).
Existing multilateral process: annual United Nations Climate Change Conferences (COP), with COP-26 highlighted as pivotal for revising climate strategies.
Numeric mitigation shortfalls and pricing context (exact figures preserved):
- Current mitigation pledges "fall well short" of limiting warming to "1.5 to 2 degrees centigrade."
- Global carbon prices average $2 per ton.
- Carbon prices "likely need to get up to $75 per ton, according to some recent analyses."
International carbon price floor concept:
- If major stakeholders simultaneously implement a minimum carbon price within their jurisdictions, this could "cover about 70 percent of global emissions reduction opportunities" and reduce competitiveness concerns.
- Such an arrangement could be designed "equitably, with stricter requirements for advanced countries, and flexibly to accommodate different policy approaches at the national level."
- The IMF Fiscal Monitor report in 2019 is cited: "even fairly modest levels of carbon pricing could be highly effective in scaling up global mitigation."
Emphasis: multilateral cooperation is required for large-scale mitigation solutions.

Multilateral organizations must "up our game": be nimble, respond quickly, and be innovative.
IMF actions cited during the COVID-19 crisis:
- Provided "more financing and to a greater number of our members than at any other time in the history of the IMF."
- Led the call for debt relief for the poorest countries, adopted by the G20.
- Continued to provide policy advice and technical assistance.
- Devoted substantial resources to climate change, inequality, gender, governance, social spending, and fintech.
Expand partnerships beyond traditional international organizations:
- Forge new partnerships that "bring in other players, including private investors and civil society."
- Example: Compact with Africa (G20-led initiative) aims to close infrastructure gaps and boost private investment; could serve as a template for leveraging private-sector creativity and productivity.
- Leverage corporate efforts to promote good governance and corporate social responsibility.
Improve advocacy to communicate the costs of a withering multilateral system:
- Recommit to openness and international cooperation while addressing downsides of globalization (rising inequality and other revealed vulnerabilities).
- Protect labor and environmental standards.
- Ensure international tax regimes prevent base erosion and profit shifting.
- Address trade in digital services and flow of data.
Overarching theme: cooperation is required to build the "building blocks for our future prosperity."

Reinvigorating multilateralism requires innovation, outreach to new partners, re-engagement, and rebuilding trust.
Renewed momentum in development and climate areas can "reignite enthusiasm for multilateralism."
The speaker invites help, support, and ideas from the audience.

Opening Remarks at the 2020 International Conference on Sustainable Development — Tao Zhang, Deputy Managing Director, September 21, 2020.