Managing Director’s Remarks at the World Bank/IMF/Financial Times Pavilion: A Fireside Chat with President Banga, Moderated by Pilita Clark
IMF News, December 1, 2023
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- Published: December 1, 2023
Context and opening points
- This is the first COP when the IMF and the World Bank have shared a pavilion; the shared pavilion is presented as a signal that multilateral cooperation must produce outcomes "bigger than we would have achieved on our own."
- Date: December 1, 2023.
Scale of climate finance and framing
- The $5 trillion climate finance target is framed against a global economy described as "over $100 trillion economy" that will continue to grow; this framing is used to argue the target is large but not impossible.
- Key question posed: is the $5 trillion meant solely for climate investment or for investments in "climate and development"? If for both, the sum is presented as less daunting.
Recommended financing approach — use all instruments
- Principle: "use all possible instruments we have at our disposal."
- Carbon pricing
- The IMF is a "huge proponent of carbon pricing."
- Carbon pricing is argued to:
- Raise revenues in an equitable way ("the more you consume, the more you pollute, the more you pay").
- Provide incentives to accelerate decarbonization, reducing required financing because consumption and production adapt.
- Public-private partnerships and blended finance
- Private-public partnerships are described as "finally at the cusp" of delivering necessary impact.
- Blended finance is characterized as "no longer just a term: it is a reality," with various instruments being deployed.
- Domestic tax collection and fiscal discipline
- A third financing source is improved domestic tax collection.
- Claim: in many developing countries tax collection is "below the 15 percent tax to GDP ratio which we think is the minimum needed to function."
- Even at tax-to-GDP ratios of 20, 21, 22, or 23 percent, IMF analysis indicates "there is space to improve tax collection."
- Digitization is cited as a tool that "makes it harder to hide money" and supports a call to "collect that tax!" and "take a more aggressive approach towards tax avoidance."
- Overall framing: tax shortfalls are "a problem, but it is a solvable problem" and IMF/World Bank institutions can contribute to solutions.
IMF instruments and recent developments
- Resilience and Sustainability Trust (RST)
- The RST is described as a "$40 billion Resilience and Sustainability Trust — which is a new trust."
- Current status: "We already have 11 programs, of which six are in Africa and the total amount committed is around $4.4 billion."
- Demand for RST support is characterized as "incredible," and "performance is improving."
- The IMF "rel[y] on the World Bank for the quality of the policy decisions we support."
- Recent pledge
- "Today the United Arab Emirates announced an additional $200 million in support for the RST."
Summary policy implications and operational notes
- Multilateral cooperation (IMF + World Bank) is emphasized as essential to scale impact.
- A multi-pronged financing strategy is recommended, combining:
- Carbon pricing to both raise equitable revenue and reduce financing needs,
- Scaled blended finance and effective public-private partnerships,
- Stronger domestic tax collection and anti–tax avoidance measures aided by digitization.
- The IMF positions the RST as an active instrument with growing demand, existing program commitments, and recent additional donor support.
Source: Managing Director’s Remarks at the World Bank/IMF/Financial Times Pavilion: A Fireside Chat with President Banga, Moderated by Pilita Clark (December 1, 2023).