The IMF and Climate Change: Tracking the IMF’s Engagement and Leadership

While the International Monetary Fund (IMF) has long signaled an interest in contributing to combat climate change, 2021 marked a critical juncture in the IMF’s commitment to the cause. Under the leadership of Managing Director Kristalina Georgieva, the IMF accelerated the mainstreaming of climate change in its operations. Most notably, Georgieva made a concerted effort to advocate that the COVID-19 pandemic responses must prioritize combatting the virus, protecting the vulnerable and staging a green recovery.

Two years into the pandemic, a new working paper from Luma Ramos, Kevin P. Gallagher, William N. Kring and Franco Maldonado evaluates the extent to which Georgieva’s words translated into IMF policies and practices. The paper acknowledges the power of executive management in the Managing Director to set the Fund’s agenda, influence state preferences and present key strategic objectives for Executive Board approval, as well as the outsized influence of the United States as a principal of the IMF with unilateral veto power.

The authors conduct a textual analysis of IMF official speeches, Article IV Country Reports and Disbursement Staff Reports between the third quarter of 2017 and the first quarter of 2021. They select this timeframe to create three distinct periods for comparison: pre-Georgieva ascent to IMF leadership, Georgieva at IMF leadership with the Trump administration and Georgieva at IMF leadership with the Biden administration.

The authors find that during the overlap between the Trump administration, which was openly hostile to climate change science, and Georgieva’s tenure as Managing Director, there was a misalignment on these issues between the key member state and the Fund leadership. Upon the inauguration of President Biden, one of his first actions as president was to sign an executive order on climate change and rejoin the Paris Agreement, signaling an alignment on the issue between Georgieva and the US.

Additionally, the authors assess the Climate Change Policy Assessments program, the 2021 Comprehensive Surveillance Review (CSR) and the Financial Sector Assessment Program (FSAP) review. This preliminary analysis finds that Georgieva’s platform for mainstreaming climate change at the IMF has been successful. The authors argue that Georgieva’s agenda-setting as the Fund’s leader was a necessary but insufficient condition for a radical shift in the institution’s practices, as evidenced by the textual analysis. While Georgieva had a limited impact before the inauguration of Biden, the assessment suggests that Georgieva’s success required an alignment of US interests on the climate agenda.