Toward a Green, Inclusive, and Digital Future
Governments need to take action to strengthen the resilience of people and the planet.
As vaccination campaigns advance and economies move forward on the path to recovery, investments in green infrastructure, social assistance programs, and digitalization will be essential to fostering a more equitable and sustainable recovery. The world has an opportunity to build forward better and channel resources into a new economy—one that is greener, invests in human capital, and strengthens the resilience of businesses and communities.
Inclusive growth
COVID-19 is widening inequality worldwide. To give everyone a fair shot at prosperity, governments need to improve access to basic public services and strengthen redistributive policies (see Figure 1.5). These reforms must be complemented by greater transparency and accountability.
The IMF continues to offer policy advice on strengthening social protection systems and fiscal positions through revenue mobilization—including options for broadening the tax base and more progressive taxation—and on tackling tax avoidance and illicit financial flows. Analytical work on gender equity and on income and wealth inequality is also underway, as is work on inclusive financial services.
Policies to Tackle Rising Inequality
Predistributive policies reduce market income inequality (before taxes and transfers), while redistributive policies reduce poverty and disposable income inequality (after taxes and transfers).
Policies to Tackle Rising Inequality
Predistributive policies reduce market income inequality (before taxes and transfers), while redistributive policies reduce poverty and disposable income inequality (after taxes and transfers).
The IMF, in collaboration with other international organizations, country authorities, and private data providers, recently launched a climate change indicators dashboard, leveraging the IMF’s leadership in statistical methodology.
Greening the recovery
Policymakers across the globe are rightly focused on fighting the COVID-19 crisis. But the climate change crisis remains, as does the need for decisive policy action to address it. Indeed, current policy decisions to facilitate recovery from the crisis may shape the world’s climate for decades. This calls for fiscal policymakers to “green” their response to the crisis.
The IMF has rapidly scaled up its work on climate. Climate-related issues and policies are being more systematically integrated into surveillance, and various policy papers and books have been published on energy subsidies, carbon pricing, natural disaster clauses in state-contingent debt instruments, and the impact of climate change on macroeconomic and financial stability. Climate-related risks are also being integrated into stress testing and financial stability monitoring as part of the IMF–World Bank Financial Sector Assessment Program (FSAP). Furthermore, work is ongoing to integrate climate considerations into the public financial management cycle (“green budgeting”) and into infrastructure governance.
The IMF, in collaboration with other international organizations, country authorities, and private data providers, recently launched a climate change indicators dashboard, leveraging the IMF’s leadership in statistical methodology.
To help close data gaps, the IMF is supporting efforts to spread further the adoption of climate disclosure across markets. In collaboration with other international organizations, country authorities, and private data providers, the IMF also recently launched a Climate Change Indicators Dashboard, leveraging the IMF’s leadership in statistical methodology. The dashboard delivers a standardized set of comparable cross-country data and makes climate change indicators available sooner and with greater frequency.
Digitalization
The COVID-19 crisis is accelerating the move toward digitalization and the use of digital money. This trend will likely reshape the international monetary system. Whether the system will ultimately be safer and more efficient depends on how well IMF member countries coordinate in seizing opportunities and managing risks.
Building on the Bali Fintech Agenda, the IMF has ramped up its work on the macro-financial implications of central bank digital currencies and privately issued digital money, with a focus on the benefits and risks, the regulation and supervision of stablecoin issuers and service providers, cross-border payments, the role of digital money in fostering financial inclusion, and its treatment in macroeconomic statistics. The use of personal data in the digital economy and the need for global policy coordination are also being explored.
The IMF will continue to analyze and deepen coverage of these issues in its surveillance, including under the FSAP, and will focus its CD on helping countries leverage opportunities from digitalization while managing cyber risks and risks to financial integrity. To improve the administration of tax and customs operations, the IMF is also offering advice on and support for digital government services, including information technology (IT) strategies, financial management information systems, government-to-person cash transfers, and digital taxpayer services.
