Climate Crossroads Fiscal Policies in a Warming World

Fiscal Monitor, October 2023

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Climate Crossroads Fiscal Policies in a Warming World

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Bibliographic details

• Published: October 2, 2023

Core framing and trilemma

• The report assesses mitigation policies across countries and frames a policy trilemma: balancing between achieving climate goals, debt sustainability, and political feasibility.
• The report finds that achieving these joint goals requires a carefully calibrated mix of revenue and spending-based policies.

Key policy findings

• Carbon pricing is a necessary instrument and should be part of the policy mix.
• Carbon pricing is not sufficient on its own and should be complemented by policies to:
  • address market failures, and
  • catalyze private financing and investment in low-carbon technologies.
• Robust fiscal transfers are needed to protect vulnerable households, workers, and communities during the green transition.

Fiscal challenges and implications

• The fiscal cost of the preferred policy mix varies and could become challenging particularly for emerging market and developing economies already experiencing high debt and rising interest costs, alongside large adaptation and development needs.
• To navigate fiscal constraints, countries with limited fiscal space should:
  • build tax capacity to mobilize revenues, and
  • improve spending efficiency.
• Policies should encourage the private sector to play an increasing role in financing and investing in climate actions.

Role of international cooperation

• Global coordination is essential to support climate efforts for developing economies, including to:
  • push forward pragmatic global carbon pricing,
  • enhance external financial support, and
  • facilitate knowledge transfers of established low-carbon technologies.

IMF Fiscal Monitor — Climate Crossroads: FISCAL POLICIES IN A WARMING WORLD, October 2023. https://www.imf.org/en/publications/fm/issues/2023/10/10/fiscal-monitor-october-2023

Content in this bundle

• Fiscal Monitor October 2023 — Database
  • Fiscal Monitor October 2023 — Database (Markdown version)
  • Fiscal Monitor October 2023 — Database (XLSX)
• Chapter 1
  • Chapter 1 (Markdown version)
  • Chapter 1 (PDF)
• Executive Summary
  • Executive Summary (Markdown version)
  • Executive Summary (PDF)
• Foreword
  • Foreword (Markdown version)
  • Foreword (PDF)
• msa
  • msa (Markdown version)
  • msa (PDF)
• Preface
  • Preface (Markdown version)
  • Preface (PDF)
• Full Report
  • Full Report (Markdown version)
  • Full Report (PDF)

References

• Press conference opening remarks
• https://origin-blogs.imf.org/en/blogs/articles/2023/10/02/countries-must-contain-global-warming-while-keeping-debt-in-check
• https://www.imf.org/en/home