Managing Director Kristalina Georgieva’s Opening Remarks at the World Government Summit
IMF News, March 30, 2022
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- Published: March 30, 2022
Context and framing
- Delivered at the Launch Event of IMF Paper: “Feeling the Heat: Adapting to Climate Change in the Middle East and Central Asia.”
- Remarks given in the context of dramatic geopolitical developments triggered by the war in Ukraine and following the pandemic, underscoring a more shock‑prone world.
- Immediate regional relevance noted: the climate crisis is already causing severe disruptions in lives and livelihoods, with particularly strong effects in the Middle East and Central Asia.
Observed climate impacts in the Middle East and Central Asia
- With just 1.1 degrees Celsius of warming, half the global population faces water insecurity at least one month per year; this is particularly strongly felt in this region.
- Over the past two decades, frequency and severity of climate‑related disasters in the region have been rising faster than anywhere in the world.
- Examples of recent disasters:
- Droughts in North Africa, Somalia and Iran.
- Epidemics and locust infestations in the Horn of Africa.
- Severe floods in the Caucasus and Central Asia.
- Century‑average yearly impacts (region-wide):
- 7 million people injured and displaced.
- 2,600 deaths.
- $2 billion in physical damages.
- Extreme weather events typically cut annual economic growth by 1–2 percentage points per capita.
- In the Caucasus and Central Asia subregion, extreme events caused a permanent loss in the GDP level of 5.5 percentage points.
- Projected warming: even with significant global cuts to emissions, by 2050 average summertime temperatures could exceed 30° Celsius in half of the region’s countries.
Economic and fiscal implications
- Adapting economies and societies requires significant investment and policy change.
- Public infrastructure investment needs may amount to up to 3.3 percent of GDP per year for individual countries in the region over the next 10 years, more than twice the emerging market average.
- Fiscal space is limited in many Middle East and Central Asian countries, particularly in the aftermath of the pandemic.
- Simulation evidence (Morocco): investment in water infrastructure improves resilience to droughts, reducing GDP losses by almost 60 percent and containing shocks to public debt.
Policy recommendations and priorities
- Drastically reduce emissions to stabilize global temperatures and make adaptation more manageable.
- To “keep 1.5 alive”, cut global emissions by one half by 2030.
- Recommend a steadily rising carbon price—including by equivalent non-pricing measures—together with green investments, and actions to ensure a just transition across and within countries.
- UAE example: pledge to invest more than $160 billion in renewables to achieve net zero carbon emissions by 2050.
- Prioritize high-value, “no-regrets” risk management measures that are justified under all plausible future climate scenarios while building adaptive capacity for future change.
- Egypt example: investing in modern irrigation techniques, education, and health care.
- UAE example: focused on clean energy, sustainable construction, and water conservation.
- Tajikistan and Uzbekistan example: upgraded cross‑border early warning systems for extreme weather events and disasters.
- Mainstream adaptation policies into national economic strategies, particularly in macroeconomic frameworks that fully reflect climate risks.
- Specific interventions: boost public investment in resilient infrastructure, including increased flood protection, better irrigation, and improved buildings.
- Domestic measures to create fiscal space:
- Mobilize revenue.
- Increase efficiency.
- Reprioritize public spending where possible (for example, replacing general fuel subsidies with targeted measures to help the most vulnerable people).
- International support:
- Advanced economies should meet (or exceed) the goal of providing $100 billion a year in climate finance to developing countries.
IMF role and commitments
- IMF stepping up engagement on climate to help countries integrate climate in their macro-financial policies through analytical, surveillance and capacity development work.
- Forthcoming World Economic Outlook will include a chapter on creating green jobs.
- IMF is setting up a new Resilience and Sustainability Trust that would aim to address macro-critical longer-term structural challenges to vulnerable member countries—including climate change.
Closing outlook
- International attention on climate issues is focused on the Middle East:
- Egypt will host COP27 in November.
- In 2023 it will be United Arab Emirates’ turn.
- The international community must come together to discuss critical importance for climate action; the IMF stands ready to support members.
Managing Director Kristalina Georgieva’s Opening Remarks at the World Government Summit — March 30, 2022.