IMF proposes climate change kitty

The International Monetary Fund will this week publish a proposal that seeks to raise $100 billion a year until 2020 to mitigate the impact posed by climate change on developing economies.

The Fund says the world must adopt a low-carbon model for growth as it rebuilds from the global economic crisis.

To help finance the shift in the global economy, the IMF has been working on a set of proposals to create a multibillion dollar kitty, known as the Green Fund, which would provide the huge sums needed for countries to confront the challenges posed by climate change.

“Climate change will hit low-income countries soonest and hardest. Africa has contributed little to the carbon emissions that endanger our planet, but it is clearly paying the price. Without urgent action, the continent will suffer more from drought, flooding, food shortages and disease — possibly provoking further instability and conflict,” IMF managing director Dominique Strauss-Kahn said, adding: “It is obvious that developing countries don’t have the cash to finance the measures needed to tackle climate change while developed countries were saddled with enormous debts from combating the global economic crisis.”

He pointed out that developing countries would require large-scale, long-term investments for climate change adaptation and mitigation with the Copenhagen Accord suggesting that $100 billion a year in funds over and above current aid commitments would be required by 2020.

The Washington-based institution says it has no plans to manage the proposed Green Fund, but rather the intention is to offer something that can make a significant contribution to the global debate and for consideration by the international community.

“I am certain questions will be asked on why we are spearheading this fight on climate change. The amount of resources needed has clear macroeconomic implications — sustainable growth in developing countries,” Mr Strauss-Kahn said.

To kick-start the project, the IMF will hold discussions with central banks and finance ministers on the feasibility of creating the Green Fund.

There are indications that the project will be partly financed through the issuance of additional special drawing rights, a reserve asset created by the IMF.

Nobel Peace laureate Wangari Maathai says the proposed fund is likely to act as a bridge to large-scale carbon-based financing in the medium term.

Interim measure

The move to establish the Green Fund, Mr Strauss-Kahn says, is an interim measure to curb the devastating effects of climate change as the United Nations High Level Advisory Group on Climate Change Financing — co-chaired by UK Prime Minister Gordon Brown and Ethiopia Prime Minister Meles Zenawi — begins its work.

The advisory team is expected to identify mechanisms for raising the $100 billion a year by 2020.

According to UN Secretary General Ban Ki-Moon, the advisory group is charged with mobilising the financial resources pledged in the Copenhagen Accord.

At the conference, delegates agreed to jumpstart immediate action on climate change and guide negotiations on long-term action.