Climate change remains a pressing need in today’s times with its repercussions hitting not just countries with excruciating heat, heat waves and trickling to severe air turbulence owing to explosive growth in air traffic scaled by global warming, thus warranting the need to step up all efforts for climate action. In this context, the World Bank Group (WBG) and the International Monetary Fund (IMF) have stepped up efforts and cooperation through an enhanced framework to help countries scale up action to contain the threat of climate change.
The collaboration strives to lend critical support for countries’ climate strategies through an integrated, country-led approach to policymakers and climate investments whereby in line with their respective mandates the WBG and IMF will leverage their analytics, technical assistance, financing, and policy expertise to enhance country-driven reform programs.
The framework entails three principles: First, countries, the World Bank Group, and the IMF will work together closely to identify each country’s climate challenges—and the priority policy reforms needed to address them. This process will be informed by the World Bank Group’s Country Climate and Development Reports (CCDRs), the IMF’s climate-related analytics, and countries’ own climate ambitions; Second, the World Bank Group and the IMF will work with other Multilateral Development Banks and development partners to help countries implement the reforms through technical assistance and financing; Third, upon request, the World Bank Group and the IMF will help establish country-led platforms designed to mobilize additional climate finance, including from the private sector.
The enhanced framework is expected to build on key takeaways and lessons learned since the release of the institutions’ Joint Statement on Enhancing IMF-World Bank Collaboration in September 2023. On the other hand, the cooperation framework between both institutions strives to foster country-driven partnership, galvanize policy changes and scale up investments to meet countries’ needs while at the same time optimizing the increased resources the institutions are dedicating to climate change and crowd in additional resources flowing from development partners and private sector.
The World Bank Group is ramping up its climate action with new measures including devoting 45 percent of annual financing to climate change adaptation and mitigation by 2025, working to bring renewable power to 250 million people in Africa by 2030, and expanding its crisis toolkit to support people on the front lines of the climate crisis. The institution has also optimized its balance sheet and is raising funds for a robust IDA21 replenishment and a new Livable Planet Fund.
While the IMF is helping countries build resilience to climate change with support from its Resilience and Sustainability Trust (RST), which is funded by generous contributions from 23 countries, and since it became operational in October 2022, 18 countries have already benefitted from the RST. The enhanced WBG-IMF collaboration framework is expected to further raise the impact of the SDRs channeled through the RST.
