Climate Change
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Overview
- The IMF frames climate change as a major threat to long-term growth and prosperity with direct impacts on the economic wellbeing of all countries.
- The IMF’s Climate Change Strategy guides integration of climate-related macroeconomic and financial risks into surveillance, lending, and capacity development.
- Through analytical work, the IMF has examined: an international carbon price floor; the transition to a green economy; border carbon adjustments; scaling up private climate finance in emerging market and developing economies; strengthening climate information architecture; fiscal policies to support adaptation; and green public investment and public financial management.
Surveillance and Financial Stability
- Article IV consultations cover macro-critical climate issues, including:
- Macroeconomic policies to adapt to and build resilience to climate change.
- Challenges from a global transition to low-carbon energy.
- Domestic policy challenges related to countries’ mitigation goals and contributions to global mitigation.
- Financial Stability Assessment Program (FSAP):
- FSAPs increasingly incorporate climate risk analysis for the financial system.
- Recent FSAPs have examined transition risk in Norway, South Africa, Chile, Colombia and the UK, and physical risk in the Philippines.
- Climate risk is being embedded where relevant in FSAP reviews of financial supervision and regulation.
Capacity Development and Tools
- The IMF provides capacity development to member countries vulnerable to climate change and natural disasters.
- Tools and offerings:
- The Climate Policy Assessment Tool (CPAT) helps policymakers assess, design, and implement climate mitigation policies for over 200 countries.
- The climate-module of Public Investment Management Assessments (C-PIMA) helps governments identify improvements in public investment institutions and processes to build low-carbon and climate-resilient infrastructure.
- The Climate Policy Diagnostics (CPD) provides in-depth analysis of climate policies, focusing on mitigation and adaptation strategies and the institutional and legal frameworks needed to support them.
- The Macroeconomics of Climate Change course and regional workshops build capacity at Finance Ministries and Central Banks.
Policy Advice: Adaptation and Mitigation
- Adaptation:
- Guidance on building financial and institutional resilience to natural disasters and extreme weather events.
- Mitigation:
- Advice on measures to contain and reduce emissions through policies and tools to help countries achieve their mitigation goals.
Data and Analytical Resources
- The IMF’s Climate Change Indicators Dashboard provides a platform for disseminating climate change data for macroeconomic and financial stability analysis.
- Analytical outputs highlighted include research on policy options and the macroeconomic implications of climate transition and physical risks.
Lending and Financing Instruments
- The Resilience and Sustainability Trust (RST):
- Helps low-income and vulnerable middle-income countries build resilience to external shocks and ensure sustainable growth.
- Provides longer-term, affordable financing to address longer-term challenges, including climate change and pandemic preparedness.
- Complements the IMF’s existing lending toolkit by supporting longer-term balance of payments stability.
Recent Analytical Findings and News Highlights
- "What Drives Policy Responses to the 2026 Energy Shock? First Evidence from the IMF Global Policy Tracker":
- Main analysis focuses on measures announced between end-February and early June, with preliminary data through mid-September.
- Findings:
- At average public debt levels, greater shock exposure is associated with a larger share of price pass-through measures.
- As debt rises, the association between shock exposure and price pass-through strengthens, while the relationship between exposure and fiscal shielding weakens.
- Monetary responses are driven mainly by pre-shock inflation developments.
- Financial-stabilization measures are more closely associated with reserve adequacy.
- Policy design—including targeting and temporariness—is shaped more by institutional capacity, inflation, and the political cycle than by shock exposure.
- Extended dataset shows a gradual shift away from fiscal shielding toward pass-through, demand- and inflation-management measures.
- Later announcements are more likely to identify beneficiaries but less likely to include explicit expiry dates or sunset provisions.
- The main findings broadly hold, although some become less statistically significant.
- Selected news items and events:
- Coming Soon: Global Financial Stability Report, October 2026 (October 13, 2026).
- Coming Soon: Taxing Better to Boost Growth (October 13, 2026).
- Shafik Hebous to present new chapter from the IMF’s Fiscal Monitor in a live discussion (October 5, 2026).
- "Shaping the Future of Asia: Opportunities and Challenges" (October 1, 2026) — examines Asia-Pacific structural challenges including the energy transition and policy reforms to support productivity, labor markets, regional integration, capital allocation, and innovation.
- Toward a New Economic Growth Model for China (September 30, 2026) — outlines reforms to shift toward household consumption, services, and productivity gains.
- IMF Executive Board completed Combined Third and Fourth Reviews under the Extended Credit Facility and the Resilience and Sustainability Facility arrangements for the Republic of Madagascar, allowing for an immediate disbursement of SDR 114.052 million (about US$155 million).
- IMF Executive Board concluded the 2026 Article IV Consultation with the People’s Republic of China—Macao Special Administrative Region (September 29, 2026).
- IMF Executive Board completed the fourth review under Liberia’s 40 month Extended Credit Facility arrangement and the first review under the 21-month Resilience and Sustainability Facility arrangement (September 28, 2026).
- Managing Director’s Curtain Raiser speech for the 2026 Annual Meetings in Bangkok, Thailand scheduled for October 7 at 2:00 p.m. SGT / 2:00 a.m. EDT.
References