IMF Working Papers

Achieving climate-related commitments and mitigating related risks to macroeconomic and
financial stability require improving the conditions for private investment. Raising sufficient private finance is
however challenging, particularly for emerging markets and developing economies. This paper develops an
analytical framework to assess how reforms shape private climate finance. Key dimensions include macrostructural reforms to lower capital costs, measures to incentivise financing for climate-related investments, and
blended financing that leverages public resources to attract private investment. To the extent the resulting
externally-financed investments are resilience- and growth-enhancing, these can also support strengthening of
the longer-term balance of payments position. Effective implementation may require international support,
especially for developing economies