BU Global Development Policy Center | Wed, Mar 17, 2021
by Kevin P. Gallagher, Luma Ramos, Corinne Stephenson-Johnson, and Irene Monasterolo
The International Monetary Fund (IMF) needs to rapidly devise a climate change strategy that helps its members meet their collective climate change and development goals. This policy brief outlines the macro-critical aspects of climate change that will need to be incorporated into IMF surveillance activity and examines the extent to which climate risks have been a part of IMF surveillance in recent years. Our research shows that the IMF has paid minimal and uneven attention to climate risks in Article IV reports, and even less so in its Financial Sector Assessment Programs (FSAPs)—though in each case the IMF has experimented with analyses that can be built upon. As a result of the reviews of Article IV surveillance and FSAPs currently underway, it is imperative that the IMF: recognize that both physical and transition risks within and across countries are macro-critical threats to financial and fiscal systems; ensure that physical and transitions risks analysis within and across countries is compulsory, systematic, and universal for all Article IV and FSAPs moving forward; and that the IMF work with staff, member states, stakeholders, the NGFS, and experts to build on its early experience and align IMF surveillance policy with ambitious climate change goals.