IMF says climate change a risk to economic, financial stability

International Monetary Fund Managing Director Ms Kristalina Georgieva has said that climate change constitute a fundamental risk to economic stability. In a virtual meeting titled Climate adaptation hosted by the Netherlands she said “As we aim to exit the COVID-19 pandemic and the economic crisis it has triggered we must face a greater threat – that of a changing climate. It is a fundamental risk to economic and financial stability.  It is also an opportunity to reinvigorate growth and create new green jobs. 

“Our research shows that combining steadily rising carbon prices with a green infrastructure push can boost global GDP over the next 15 years by about 0.7 percent and generate work for millions of people.  This is why at the IMF we embrace the transition to the new climate economy — one that is low carbon and climate resilient, that helps fight the causes of climate change and adapt to its consequences. This means actions in four key areas; first, integrating climate in our annual country economic assessments – our Article IV consultations. In highly vulnerable countries we focus on adaptation; and we are building up mitigation analysis, including carbon pricing, in our assessments of large emitters. Second, including climate related financial stability risks in financial sector surveillance – through standardised disclosure of these risks, enhanced stress tests and assessments of supervisory frameworks. 

“Third, scaling up climate in capacity development to help equip finance ministries and central banks with the skills needed to take climate considerations into account. Fourth, mainstreaming climate indicators in macroeconomic data. We will launch a Climate Change Dashboard this year—with indicators to track the economic impact of climate risks and the measures taken to mitigate them”.