IMF Chief Proposes Green Fund to Address Climate-Related Shocks in Africa
8 March 2010: Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), took part in a panel discussion at the Kenya International Conference Center in Nairobi, and addressed the twin challenges facing Africa: to revive strong growth and reinforce resilience to shocks, including those related to climate change.
On the subject of shocks, he said that climate-related shocks cannot be ignored as they will hit low-income countries soonest and hardest. He emphasized that the amount of resources needed has clear macroeconomic implications and that sustainable growth in developing countries will require large-scale, long-term investments for climate change adaptation and mitigation.
Strauss-Kahn explained that the IMF staff is therefore working on the idea of a “Green Fund” with the capacity to raise US$100 billion a year by 2020. He further clarified that the the IMF does not intend to manage such a fund, but presents the idea as the UN High-Level Advisory Group on Climate Change Financing is about to begin its work. A Green Fund is suggested as an interim solution, as ultimately funding will need to come as budgetary transfers from developed countries, drawing on scaled-up carbon taxes and expanded carbon trading mechanisms. Since these new revenue sources will take time to put in place, the IMF Chief suggested the “Green Fund” could provide a mechanism to act as a bridge to large-scale carbon-based financing in the medium term. He also suggested IMF quotas could provide a key for burden sharing, to help overcome one of the obstacles to an agreement. [IMF Press Release]