Statement delivered by Ms. Marilou Uy, Task Force on Climate, Development and the IMF
V20 MINISTERIAL DIALOGUE IX
16 October 2022
Ms. Marilou Uy, Task Force on Climate, Development and the IMF
Thank you, Chair. We appreciate the opportunity to be with the V20 today.
As a brief introduction, the Task Force is a consortium of experts from around the world, including five South-based institutions utilizing rigorous research to advance a development-centered climate change approach at the IMF. The V20 and the Group of 24 are important constituencies of the research agenda being pursued by the Task Force.
Our ongoing research analyzes the macro critical impact of climate risks and challenges to addressing adaptation and mitigation in developing countries. Work has been carried out in countries in Asia, Latin America, and Africa to better understand the extent of such impacts and the policies and financing needed to create pathways to address climate change that also promote development.
One critical issue that has come to the fore in our research is how to stem the vicious cycle of death and climate shocks. The increased frequency and intensity of climate shocks, as many of you pointed out, simply highlight the urgency of support for loss and damage and for quickly ramping up investments in adaptation and building resilience.
However, there is clear research from the IMF and many others that many developing countries do not have the fiscal space to undertake these investments, and particularly so among high countries with high debt burdens.
Filling the financing gap will require strengthening the architecture of international climate finance, the topic today, innovative instruments are emerging such as an insurance and sovereign bond financing, but much more is needed.
Concessional external financing support from various sources is essential. And the cost of capital needs to be brought down to more affordable levels than currently is the case.
The IMF’s RST could play an important role through its own lending, but also in proactively crowding in critical concessional and blended financing for adaptation investments.
For countries in debt distress, more effective global coordination is essential to ensure expeditious debt restructuring and relief when warranted. More could be done to explore mechanisms to scale up efforts to reduce debt burdens to climate actions, and in this regard, we welcome the IMF paper on debt for climate swaps.
Going forward, debt sustainability analysis will need to incorporate the spectrum of climate risk, physical transition, and transition spillovers to better understand the close interaction of climate and debt as has been shown by the Task Force’s research.
Finally, it is an imperative, we join others in saying that it is an imperative to do more to achieve climate and development in tandem and in strength.
Our hope in the Task Force is to contribute to research that could inform global discussions as well as solutions tailored to country circumstances. Thank you.