Kristalina Georgieva says investing to create resilient economies is a ‘win-win-win-win’ scenario
Helping the most vulnerable people to cope with the climate crisis can boost the global economy during the Covid crisis and governments should make this a priority, the head of the International Monetary Fund has said.
Kristalina Georgieva said international responses to the pandemic must urgently take account of the need to adapt to the impacts of extreme weather and other climate shocks, as well as reducing greenhouse gas emissions.
“The good news is that it can be win-win-win-win,” she said. “Building resilience can be good for nature and ecosystems; it can be good for economic growth; at a time when economies have lost low-skilled jobs, it boosts job creation; and the fourth win is that it can bring health benefits [such as reduced air pollution].”
Georgieva pledged help from the IMF to countries hit by the climate crisis, and to those seeking to fulfil the Paris agreement.
“What we want is for countries to think of the IMF as a source of help, and not be afraid to come to us,” she told the Guardian. “We want to build buffers to these shocks for countries that are highly vulnerable.”
These measures could not wait, she warned. “The impact of a changing climate is already upon us, hitting vulnerable countries and vulnerable people most severely. These are countries that are often already experiencing economic and social problems.”
The IMF is the global international financial institution set up alongside the World Bank and in parallel with the UN, and other institutions at the end of the second world war, to support global trade.
It has been heavily criticised in the past for imposing “structural adjustment programmes” on poor countries that harmed their public sectors, including public health systems, and for promoting aggressive privatisation and other stringent measures, while ignoring social and environmental considerations.
Georgieva, who took over her role in October 2019, shortly before the pandemic struck, signalled that she wanted a different direction for the IMF.
“The IMF can do the right thing,” she said. “What the IMF brings is incredible ambition, analysis, policy and financial skills to transition to a new climate economy.
“We are the only institution that regularly takes the pulse of regional, national and global economy. We recognise that climate change is a macro-critical factor.”
Georgieva said the IMF stood ready to help countries decarbonise their economies in line with a goal of reaching net zero emissions by mid-century.
“The mandate [of the IMF] is not changing, not becoming something else, but incorporating growth, employment and financial stability. There is no question that climate change matters to growth, employment and financial stability.”
Georgieva was speaking ahead of a global summit on climate adaptation, at which world leaders and top officials – including the UN secretary-general António Guterres, British prime minister Boris Johnson, French president Emmanuel Macron, German chancellor Angela Merkel, Indian prime minister Narendra Modi and the US climate envoy, John Kerry – will meet virtually to discuss global preparedness for the impacts of the climate crisis.
Protecting and improving infrastructure, from flood barriers to mobile telecoms for early warning systems, could add 0.7% to global economic growth in the next 15 years, and create millions of new jobs around the world, if governments were willing to take such actions, Georgieva said. “Every $1 invested [in adaptation] brings $4 to $7 in damage prevented,” she noted.
Many of the measures needed, from adapting buildings and improving transport networks to restoring natural features such as coastal mangrove swamps and upland forests, would be labour-intensive, she added.
Georgieva, who is Bulgarian, has a history of pushing climate up the agenda of key institutions she has helped to lead.
At the World Bank, where she served in senior roles from 1993 to 2010, and again as chief executive then acting president from 2017 to 2019, she was noted for including climate in key policies.
At the European commission, where she was commissioner for humanitarian issues then international development from 2010 to 2016, she emphasised the need to coordinate climate policy with overseas aid.
Georgieva will build on the work of her IMF predecessor, Christine Lagarde, now president of the European Central Bank, who also pushed for more action on the climate.
The role of international institutions in the global heating crisis was highlighted at the Paris climate summit in 2015, but their record has been mixed. Campaigners have warned that too much of their focus, particularly in the recovery from the pandemic, is still on propping up the fossil fuel economy.
Climate finance – aid to poor countries to help them reduce emissions and adapt to the impacts of extreme weather – will be a key pillar of the UN Cop26 climate summit, to be hosted by the UK this November.
The UN recently called on rich countries to fulfil their promise of $100bn a year in climate finance to the developing world, with international institutions expected to play a key role.
At the Climate Adaptation Summit, to be hosted by the Netherlands on Monday, Boris Johnson is expected to say: “It is undeniable that climate change is already upon us, and is already devastating lives and economies.
“We must adapt to our changing climate, and we must do so now. I’ll be making the need for a resilient recovery a priority of the UK’s G7 presidency this year.”