Speech

Managing Director's Remarks at the Global Center on Adaptation's Africa Adaptation Summit

September 5, 2022

As prepared for delivery

Excellencies,

Today, I want to talk about three things. First, the context in which we meet. Second, the criticality to adopt the concept of resilience and to accelerate adaptation in Africa. And third, the role of the IMF, and how we partner with others.

Last year when we met, we were hopeful that the COVID-induced economic crisis was behind us. And that 2022 would be a prosperous year.

Unfortunately, we were proven wrong—and we got a crisis upon a crisis.

We are now experiencing a cost-of-living crisis. A war in Europe — Russia’s invasion of Ukraine — has had an impact, fast and far. And the climate crisis has hit hard in many places this year — if anyone still held the belief that we could duck and let it pass over our heads, they now know differently. It is dramatic and it is set to be even more serious in the future.

There are two lessons we draw from the context today. One, that we are living in a more shock-prone world, and we must be mindful that unexpected events can disrupt our plans.

Second, we learned that global cooperation is fragile and that the risk of fragmentation is serious. And at a time when we need each other more than ever, it is harder to come together for collective action. Yet, we must.

We must heed the call to embrace the whole of humanity and come together in the most testing moments. I endorse this from the bottom of my heart.

We must also recognize that these shocks have exhausted people. People are tired of the pandemic, and now they are being hit with inflation.

In many countries, fiscal space is gone, and the debt situation for 25 percent of emerging markets is no longer sustainable.

Just think of Sri Lanka and many countries that are in a similar position. We even see a country with strong fundamentals like Ghana in a situation where it is harder to access markets because of exogenous shocks. And among poorer countries, over 60 percent are in or at risk of debt distress.

So, when I look at this picture, what is the conclusion?

We can no longer think of our economies as relatively simple mechanisms which function so long as there is a strong banking sector and financial stability. Remember—after the financial crisis, the world regulated the banking sector to make it more resilient.

Now, that concept of resilience must expand to become more comprehensive.

We need resilient people that are educated, that are healthy, and have the security of some social protection.

We need not just resilient economies. We need resilient societies in which people feel that they belong, that there is fairness, that there are jobs for them.

And we need a resilient planet.

Embracing this concept of resilience is hugely important for Africa.  When it comes down to the climate crisis, we all know Africa has contributed the least to it, but suffers the most from its consequences. And I salute the African leaders gathered here today for their commitment to advancing climate adaptation.

The IMF has a very important task: macroeconomic and financial stability, growth, and employment. We can no longer deliver on this mission unless we embrace this comprehensive concept of resilience.

That means we must look at social protection and social spending in our member countries and make sure it is protected. That means we must look at investment decisions and be confident they are resilient.

What does it mean for us? The IMF today is a systemically significant institution in the fight against climate change. We integrate climate in our policy analysis, policy recommendations, and in our financial sector assessments. We integrate it in our public investment management assessments.

And we now have a financing instrument to put our money where our mouth is: the Resilience and Sustainability Trust. It is now $40 billion-strong.

Our mission is to use this money to support countries to unleash the potential of private finance. So, my dream is for the $40 billion to generate $400 billion in financing for adaptation and mitigation in our member countries.

In countries that are high emitters, the focus is mitigation. And let's remember: the more we mitigate, the less we have to adapt.

In climate-vulnerable countries, the focus is on adaptation—and I’m proud that we have many countries from Africa who are thinking of tapping into this instrument. This is the first instrument at the IMF with a long maturity—20 years—and a long grace period—10.5 years.  

We hope to advance quickly with several of these African countries, as we now have this financial capacity to be a force for good on adaptation.

And, of course, we endorse the African Adaptation Acceleration Plan, and we will work to make sure that we are aligned. Cooperating with others is a ‘must’ if we are to succeed.

To conclude, for far too long, we saw care for the environment as a burden.

But we are here today because we know better. This planet is our only home, and nature is the main provider of what life depends on.  Protecting our climate and adapting to the changes we have caused is existential for the future of humanity.  And if we do it right, it can be a source of new economic opportunities, create jobs, and improve living standards.

Thank you very much.