Armenia: Technical Assistance Report-Quantifying Fiscal Risks from Climate Change
IMF Staff Country Reports, October 26, 2022
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Bibliographic details
- Published: October 26, 2022
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400224140.002
Overview
- Armenia faces considerable fiscal risks from climate change due to increasing and highly variable temperatures.
- The report provides guidance on how to quantify those risks over the long term using an empirical approach to identify the potential impact of a range of temperature scenarios on GDP and the public finances.
- Publication date: October 26, 2022.
Key findings
- An extreme unmitigated temperature scenario that incorporates higher year to year variability could reduce GDP by 18 percent relative to baseline.
- That extreme scenario could lead to an unsustainable public debt trajectory by 2070.
- The state’s balance sheet has particular exposures to climate change through:
- SOE (state-owned enterprises)
- PPP (public-private partnership) projects
- The government’s lending portfolio in the energy, water and transport sectors
Methodology and scope
- Uses an empirical approach to quantify long-term fiscal risks from a range of temperature scenarios.
- Focuses on the transmission of temperature variations to GDP and public finances over the long term.
- Emphasizes temperature variance as a key driver of fiscal risk in Armenia.
Fiscal and sectoral exposures
- Explicitly identifies exposures on the state balance sheet via:
- SOE contingent liabilities and vulnerabilities
- PPP climate change risk exposure
- Lending portfolios concentrated in energy, water, and transport sectors
Policy implications and recommendations (implied by report focus)
- Quantification of climate-related fiscal risks is necessary to assess long-term debt sustainability.
- Monitoring and managing exposures in SOEs, PPPs, and sectoral lending portfolios (energy, water, transport) is critical to limit fiscal vulnerabilities.
- Incorporating temperature variability and extreme unmitigated scenarios into fiscal planning can inform adaptation and mitigation priorities.
International Monetary Fund. "Armenia: Technical Assistance Report-Quantifying Fiscal Risks from Climate Change" (October 26, 2022).
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