IMF Deputy Managing Director: Climate Change Poses Serious Macroeconomic Challenges for Low-Income Countries

Takatoshi_kato29 May 2008: Climate change poses “particularly serious macroeconomic, fiscal, and financial challenges for low-income countries,” said Takatoshi Kato, Deputy Managing Director of the International Monetary Fund (IMF) at the Fourth Tokyo International Conference on African Development (TICAD IV), which convened in Yokohama, Japan, from 28-30 May 2008.

Kato recommended that developing countries remove impediments to domestic agricultural production to enhance economic growth and improve capacity to deal with climate change. He said countries “should avoid direct price and export controls, not least because they will likely discourage food production, running counter to the long-term goals countries should be pursuing.” Regarding mitigation, he noted that “reducing emissions of greenhouse gases requires putting a price on these emissions that reflects the global damage they cause.” Even though Africa's contribution to global emissions is small, he highlighted the need in many African countries to eliminate remaining fuel subsidies, something that he noted is “desirable on both fiscal and distributional grounds.” [Full Address]