Federated States of Micronesia: Climate Change Policy Assessment

IMF Staff Country Reports, September 6, 2019

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The Climate Change Policy Assessment (CCPA) takes stock of the Federated States of Micronesia (FSM)’s climate response plans from the perspective of their macroeconomic and fiscal implications.
CCPA explores the possible impact of climate change and natural disasters and the cost of FSM’s planned response.
The report suggests macroeconomically relevant reforms that could strengthen the national strategy and identifies policy gaps and resource needs.

FSM has made progress toward its Nationally Determined Contribution mitigation pledge by beginning to expand renewable power generation and improve its efficiency.
The authorities plan to continue renewable expansion and encourage take-up of energy efficient building design and appliances.

Accelerating adaptation investments is paramount.
Addressing critical capacity constraints and increasing grant financing are required to accelerate adaptation investments.
It is recommended that FSM increase its capacity to address natural disaster risks following the expiry of Compact-related assistance in 2023.
It is advised to improve climate data collection and use, including on:
- the costs of high and low intensity disasters, and
- disaster response expenditure.

The assessment evaluates the macroeconomic and fiscal implications of climate change, natural disasters, and FSM’s planned responses.
It identifies reforms that are macroeconomically relevant to strengthen the national strategy and identify policy gaps and resource needs.