Speech

Managing Director Kristalina Georgieva’s Opening Remarks at the World Government Summit

March 30, 2022

Excellencies, ladies and gentlemen:

I am very pleased to be here for the World Government Summit and to also to launch our latest analysis on Climate Change in the Middle East and Central Asia.

It is taking place in the context of dramatic geopolitical developments, triggered by the war in Ukraine, with significant implications for people, societies, and economies. Like the pandemic, it is a stark reminder that we live in a more shock‑prone world.

The climate crisis is already causing severe disruptions in lives and livelihoods. With just 1.1 degrees Celsius of warming, half the global population faces water insecurity at least one month per year. And this is particularly strongly felt in this region.

Over the past two decades, the frequency and severity of climate‑related disasters here have been rising faster than anywhere in the world. Droughts in North Africa, Somalia and Iran. Epidemics and locust infestations in the Horn of Africa. Severe floods in the Caucasus and Central Asia. The list of disasters is quickly getting longer.

And—as our new IMF paper shows—the economic and financial implications of these climate impacts are a major threat to growth and prosperity in the region.

This century—in an average year—climate disasters in the Middle East and Central Asia have injured and displaced 7 million people and caused more than 2,600 deaths and $2 billion in physical damages.

We also know that extreme weather events typically cut annual economic growth by 1–2 percentage points per capita. In the Caucasus and Central Asia subregion, they even caused a permanent loss in the GDP level of 5.5 percentage points.

Today’s climate challenges are already exacting a heavy toll. And we know our planet is set to keep on getting warmer. Even accounting for significant global cuts to emissions, by 2050, average summertime temperatures could exceed 30° Celsius in half of the region’s countries.

What can we do to adapt their economies and societies to this daunting challenge?

First, all countries need to drastically reduce emissions to stabilize global temperatures and make the adaptation challenge more manageable.

Our analysis shows that to “keep 1.5 alive”, we need to cut global emissions by one half by 2030. To get there we recommend a steadily rising carbon price—including by equivalent non-pricing measures—together with green investments, and actions to ensure a just transition across and within countries. Here, the UAE has led regional efforts with its pledge to invest more than $160 billion in renewables to achieve net zero carbon emissions by 2050.

Second, prioritize high-value, “no-regrets” risk management measures justified under all plausible future climate scenarios while building adaptative capacity for future change. Egypt, for example, is investing in modern irrigation techniques, education, and health care. The UAE is focused on clean energy, sustainable construction, and water conservation.

In highly vulnerable countries, investing in disaster preparedness and coping capacity is vital, together with stronger institutions and social resilience. Tajikistan and Uzbekistan, for instance, have upgraded their cross-‑border early warning systems for extreme weather events and disasters.

Third, mainstream adaptation policies into national economic strategies, particularly in macroeconomic frameworks—which should fully reflect climate risks.

Within these frameworks, specific interventions could help boost public investment in resilient infrastructure, including increased flood protection, better irrigation, and improved buildings. Simulations for Morocco show that investment in water infrastructure improves resilience to droughts, reducing GDP losses by almost 60 percent and containing shocks to public debt. 

Of course, these measures require additional effort. We estimate that the public infrastructure investment needs may amount to up to 3.3 percent of GDP per year for individual countries in the region over the next 10 years, more than twice the emerging market average. 

But overall, fiscal space is limited in many Middle East and Central Asian countries, particularly in the aftermath of the pandemic. Adaptation to boost resilience to future climate-related disasters needs a mix of domestic policy reforms and greater international support.

On the domestic side, countries could start by mobilizing revenue, increasing efficiency and reprioritizing public spending where possible, for example, replacing general fuel subsidies with targeted measures to help the most vulnerable people. On the international side, a good start would be for advanced economies to meet (or exceed) the goal of providing $100 billion a year in climate finance to developing countries.

The IMF will play its part.

Given the economic challenges that climate change is causing worldwide, and this region is no exception, we at the IMF are stepping up our engagement on climate. Our goal is to help countries strengthen their ability to integrate climate in their macro-financial policies, through our analytical, surveillance and capacity development work. For example, the forthcoming World Economic Outlook will include a chapter on creating green jobs.

And we are setting up a new Resilience and Sustainability Trust that would aim to address macro-critical longer-term structural challenges to vulnerable member countries—including climate change.

Let me conclude.

This year, international attention on climate issues is squarely focused on the Middle East. Egypt will host COP27 in November, and in 2023 it will be United Arab Emirates’ turn. As we look ahead to these meetings, the international community must come together to discuss the critical importance for climate action, for our present and our future.

The IMF stands ready to support our members as we work together in these efforts.