Climate change presents a major threat to long-term growth and prosperity, and has a direct impact on the economic wellbeing of all countries. The IMF has an important role to play in helping its members institute fiscal and macroeconomic policies to help address these climate-related challenges. We are mainstreaming climate-related risks and opportunities into our macroeconomic and financial policy advice. Climate considerations are now embedded in our bilateral and multilateral surveillance, capacity development, and lending. We also increasingly collaborate with other organizations on climate issues.
Through our analytical work we have examined policy issues such as an international carbon price floor, the transition to a green economy, border carbon adjustments, scaling up private climate finance in emerging market and developing economies, strengthening climate information architecture, fiscal policies to support adaptation, and green public investment and public financial management.
The IMF is sharing a pavilion at COP29 with the World Bank Group and the Financial Times to create opportunities for dialogue and knowledge sharing. The IMF will continue to promote economic and financial sector policies that can help our members and the wider international community reach shared climate goals: such as reducing emissions, increasing climate finance, boosting resilience, and easing the transition to low-carbon economies.
Learn more
Sleepwalking to a Cliff Edge: A Wake-Up Call for Global Climate Action
Policies to Foster Green FDI: Best Practices for Emerging Market and Developing Economies
Destination Net Zero: The Urgent Need for a Global Carbon Tax on Aviation and Shipping
Focus Area: Fossil Fuel Subsidies
Staff Climate Notes
IMF Climate Change Strategy
Closing the gender gap in science, technology, engineering, and math would accelerate the green transition while making it more inclusive
Easing the burden on lower-income households is not only socially fair, but also economically efficient
New books offer fresh perspectives on climate, China, and John Maynard Keynes
Data Gaps Initiative helps policymakers better understand the environmental impact of economic activities and the effectiveness of climate policies
Our biggest challenges—from global warming to demographic and technological transformations—cannot be resolved by countries acting alone.
Meeting the continent’s emission reduction targets could enhance energy security metrics by 8 percent by 2030—and that would be just the start
Since the 2024 Spring Meetings, the IEO finalized the evaluation on The Evolving Application of the IMF’s Mandate and launched a new evaluation on The IMF and Climate Change. The IEO has continued its progress on the ongoing evaluations of The IMF’s Exceptional Access Policy and the IMF Advice on Fiscal Policy. The IEO will develop an Evaluation Policy that addresses the recommendations of the Fourth External Evaluation of the IEO, which was concluded in July 2024.
The global economy has proven resilient, and a soft landing is within reach. Inflation has moderated thanks to tight monetary policy and fading supply shocks, and growth is expected to remain steady. But uncertainty remains significant, with risks tilted to the downside; medium-term growth prospects are lackluster; public debt has reached record highs and is expected to approach 100 percent of GDP by 2030; and geoeconomic fragmentation threatens to undo decades of gains from cross-border economic integration. At the same time, transformative changes—the green transition, demographic shifts, and digitalization, including artificial intelligence—are poised to reshape the global economy, creating challenges but also opportunities. Against this background, the key policy priorities are to secure a soft landing and break from the low growth-high debt path, and address other medium-term challenges. Monetary policy should ensure inflation returns durably to the target, and fiscal policy needs to decisively pivot toward consolidation to rebuild buffers and safeguard debt sustainability. Growth-enhancing reforms are urgently needed to lift growth prospects by boosting investment, job creation, and productivity. Domestic policies must be complemented by multilateral efforts to support countries with debt vulnerabilities, protect gains from economic integration, accelerate climate action, and harness benefits of new technologies while mitigating the risks. As it has done since its founding 80 years ago, the IMF will continue to adapt to serve its members with tailored policy advice, financial lifelines when needed, and capacity development. The Fund will remain a strong advocate for multilateralism and economic integration as foundations on which to build a resilient and inclusive global economy.
Global public debt is elevated. It is projected to exceed US$100 trillion in 2024 and will rise over the medium term. This chapter shows that risks to the debt outlook are heavily tilted to the upside. In a severely adverse scenario, global debt is estimated to be nearly 20 percentage points of GDP higher three years ahead than the baseline projection, reaching 115 percent of GDP. Much larger fiscal adjustments than currently planned are required to stabilize (or reduce) debt with high probability. Now is an opportune time for rebuilding fiscal buffers and delaying is costly. Rebuilding fiscal buffers in a growth-friendly manner and strengthening fiscal governance is essential to ensure sustainable public finances and financial stability.
The global economy has remained resilient, and a soft landing is within reach. Global growth has been resilient despite a series of shocks and is projected to remain steady, and inflation has continued to moderate, although progress is uneven across countries. However, medium-term growth prospects remain weak, with the risk for the global economy to get stuck on a low growth-high debt path. While the low-income developing countries (LIDCs) continue to recover, many remain vulnerable, with significant scarring from recent shocks. The pace of convergence toward higher living standards has slowed, making it increasingly challenging to achieve the Sustainable Development Goals (SDGs). As inflation descends and approaches targets, monetary policy must ensure that inflation expectations are well anchored while supporting growth and employment. Fiscal consolidation is necessary to rebuild buffers, fund priority investments, and ensure long-term debt sustainability. Multilateral cooperation is essential to limit the costs associated with geoeconomic fragmentation, support efforts to address debt vulnerabilities, and harness the benefits while mitigating the risks associated with the green and digital transitions.
Urgent action to cut greenhouse gas (GHG) emissions is needed now. Early next year, all countries will set new emissions targets for 2035 while revising their 2030 targets. Global GHGs must be cut by 25 and 50 percent below 2019 levels by 2030 to limit global warming to 2°C and 1.5°C respectively. But current targets would only cut emissions by 12 percent, meaning global ambition needs to be doubled to quadrupled. Further delay will lead to an ‘emissions cliff edge’, implying implausible cuts in GHGs and putting put 1.5°C beyond reach. This Note provides IMF staff’s annual assessment of global climate mitigation policy. It illustrates options for equitably aligning country targets with the Paris Agreement’s temperature goals. It also provides guidance on modelling needed to set emissions targets and quantify climate mitigation policy impacts.
Since the 2024 Spring Meetings, the IEO finalized the evaluation on The Evolving Application of the IMF’s Mandate and launched a new evaluation on The IMF and Climate Change. The IEO has continued its progress on the ongoing evaluations of The IMF’s Exceptional Access Policy and the IMF Advice on Fiscal Policy. The IEO will develop an Evaluation Policy that addresses the recommendations of the Fourth External Evaluation of the IEO, which was concluded in July 2024.
The global economy has proven resilient, and a soft landing is within reach. Inflation has moderated thanks to tight monetary policy and fading supply shocks, and growth is expected to remain steady. But uncertainty remains significant, with risks tilted to the downside; medium-term growth prospects are lackluster; public debt has reached record highs and is expected to approach 100 percent of GDP by 2030; and geoeconomic fragmentation threatens to undo decades of gains from cross-border economic integration. At the same time, transformative changes—the green transition, demographic shifts, and digitalization, including artificial intelligence—are poised to reshape the global economy, creating challenges but also opportunities. Against this background, the key policy priorities are to secure a soft landing and break from the low growth-high debt path, and address other medium-term challenges. Monetary policy should ensure inflation returns durably to the target, and fiscal policy needs to decisively pivot toward consolidation to rebuild buffers and safeguard debt sustainability. Growth-enhancing reforms are urgently needed to lift growth prospects by boosting investment, job creation, and productivity. Domestic policies must be complemented by multilateral efforts to support countries with debt vulnerabilities, protect gains from economic integration, accelerate climate action, and harness benefits of new technologies while mitigating the risks. As it has done since its founding 80 years ago, the IMF will continue to adapt to serve its members with tailored policy advice, financial lifelines when needed, and capacity development. The Fund will remain a strong advocate for multilateralism and economic integration as foundations on which to build a resilient and inclusive global economy.
Global public debt is elevated. It is projected to exceed US$100 trillion in 2024 and will rise over the medium term. This chapter shows that risks to the debt outlook are heavily tilted to the upside. In a severely adverse scenario, global debt is estimated to be nearly 20 percentage points of GDP higher three years ahead than the baseline projection, reaching 115 percent of GDP. Much larger fiscal adjustments than currently planned are required to stabilize (or reduce) debt with high probability. Now is an opportune time for rebuilding fiscal buffers and delaying is costly. Rebuilding fiscal buffers in a growth-friendly manner and strengthening fiscal governance is essential to ensure sustainable public finances and financial stability.
The global economy has remained resilient, and a soft landing is within reach. Global growth has been resilient despite a series of shocks and is projected to remain steady, and inflation has continued to moderate, although progress is uneven across countries. However, medium-term growth prospects remain weak, with the risk for the global economy to get stuck on a low growth-high debt path. While the low-income developing countries (LIDCs) continue to recover, many remain vulnerable, with significant scarring from recent shocks. The pace of convergence toward higher living standards has slowed, making it increasingly challenging to achieve the Sustainable Development Goals (SDGs). As inflation descends and approaches targets, monetary policy must ensure that inflation expectations are well anchored while supporting growth and employment. Fiscal consolidation is necessary to rebuild buffers, fund priority investments, and ensure long-term debt sustainability. Multilateral cooperation is essential to limit the costs associated with geoeconomic fragmentation, support efforts to address debt vulnerabilities, and harness the benefits while mitigating the risks associated with the green and digital transitions.
Urgent action to cut greenhouse gas (GHG) emissions is needed now. Early next year, all countries will set new emissions targets for 2035 while revising their 2030 targets. Global GHGs must be cut by 25 and 50 percent below 2019 levels by 2030 to limit global warming to 2°C and 1.5°C respectively. But current targets would only cut emissions by 12 percent, meaning global ambition needs to be doubled to quadrupled. Further delay will lead to an ‘emissions cliff edge’, implying implausible cuts in GHGs and putting put 1.5°C beyond reach. This Note provides IMF staff’s annual assessment of global climate mitigation policy. It illustrates options for equitably aligning country targets with the Paris Agreement’s temperature goals. It also provides guidance on modelling needed to set emissions targets and quantify climate mitigation policy impacts.
Article IV consultations will cover macro-critical issues triggered by climate change and/or the need to contain it. These include countries’ contributions to the global mitigation effort, especially by large emitters; domestic policy challenges that arise in the context of achieving countries’ nationally determined contributions under the Paris Agreement; macroeconomic policies to adapt to and build resilience to climate change; and challenges presented by a global transition to low-carbon energy.
Financial Stability Assessment Program (FSAP)
FSAPs are paying increasing attention to climate risk analysis for the financial system. Recent FSAPs have looked at the implications of transition risk in Norway, South Africa, Chile, Colombia and the UK, and physical risk in the Philippines. Where relevant, climate risk considerations are also being embedded in FSAP reviews of financial supervision and regulation.
The IMF already supports member countries through capacity development in countries vulnerable to climate change and natural disasters.
Adaptation
Guidance on building financial and institutional resilience to natural disasters and extreme weather events, and infrastructure investments to cope with rising sea levels and other warming-related phenomena.
Mitigation
Advice on measures to contain and reduce emissions through policies—such as increasing carbon taxes, reducing fuel subsidies and improving regulation—and providing tools to help countries achieve their Nationally Determined Contributions.
Transition to a low-carbon economy
Advice on measures to contain and reduce emissions through policies—such as increasing carbon taxes, reducing fuel subsidies and improving regulation—and providing tools to help countries achieve their Nationally Determined Contributions.
Data
The IMF's Climate Change Indicators Dashboard provides a platform for disseminating climate change data for macroeconomic and financial stability analysis. The dashboard helps users assess the linkage between economic and financial activities and government policies on the one hand, and climate change (and environment more broadly) on the other—either on a country-level or cross-country basis—by analyzing a standardized set of comparable data.
The IMF’s Resilience and Sustainability Trust (RST) helps low-income and vulnerable middle-income countries build resilience to external shocks and ensure sustainable growth, contributing to their longer-term balance of payments stability. It complements the IMF’s existing lending toolkit by providing longer-term, affordable financing to address longer-term challenges, including climate change and pandemic preparedness.
The damage and economic losses generated by natural catastrophe events and climate change have risen significantly in frequency and scale in recent years.
Urgent action to cut greenhouse gas emissions is needed. Further delay will lead to an ‘emissions cliff edge’, putting 1.5°C target beyond reach.
Promoting STEM education, especially for young women, is fundamental to speeding up the green transition and making it more inclusive.
Transformative climate policy reforms are key to unlock climate investments at the scale and speed necessary to achieve countries’ ambitious climate goals.
Barbados' innovative debt-for-climate conversion promises a scalable model that can transform climate finance without increasing public debt.
Shedding new light on the importance of considering climate-related supply shocks when designing monetary policy.
