What does Q-CRAFT do?

Q-CRAFT is a transparent, flexible, and easy-to-use Excel-based tool developed by the IMF's Fiscal Affairs Department (FAD) to help governments at all stages of development assess long-term macroeconomic fiscal risks from climate change.

• Projects key macroeconomic variables and fiscal aggregates, such as GDP, fiscal deficit and debt-to-GDP ratio, using publicly available data and user assumptions for over 170 economies through to the end of the century.
• Assesses how fiscal aggregates may evolve under different IPCC emission scenarios and various speeds of economic adaptation to rising temperatures.
• Can be adapted to use national data and integrate additional shocks, such as natural disasters.

How can Q-CRAFT inform policymaking?

Q-CRAFT equips government institutions, such as Ministries of Finance and Independent Fiscal Institutions, with comprehensive, data-driven assessments of long-term macroeconomic and fiscal risks posed by climate change. By projecting key variables like GDP growth and debt-to-GDP ratios through 2100, it enables policymakers to:

• Identify slow-building fiscal risks from climate change, by identifying long-term fiscal pressures that may not be apparent in short-term budgets or medium-term fiscal frameworks.
• Assesses the impact of different emission scenarios on public finances, aiding in the formulation of resilience-building policies, and supporting earlier and smoother policy interventions.
• Integrate climate risks into longer-term fiscal planning and strategy development, complementing other macroeconomic models that account for factors like aging populations.
• Enhances long-term fiscal analysis by incorporating the impacts of climate change on fiscal variables over the long-term and extending the time horizon for fiscal policy analysis.

How is Q-CRAFT applied in Capacity Development?

Through its Capacity Development (CD) support, FAD helps member countries integrate climate considerations into their fiscal risk frameworks using Q-CRAFT. This approach not only quantifies climate-related fiscal risks but also strengthens macro-fiscal forecasting capabilities. CD initiatives have fostered cross-government collaboration and led to the inclusion of climate change fiscal risk analysis in Fiscal Risk Statements in numerous countries across the globe.