IMF « Climate Equity

Just eight weeks after IMF Managing Director Dominique Strauss-Kahn ventured the expertise of his organization to help the international community to “think outside of the box” on climate financing, the IMF staff has delivered: print-fresh from Washington’s 19th Street comes a short, but content-heavy paper by two IMF economists on how an international Green Fund partially financed by climate-SDRs could be set-up with the goal of generating some US$ 100 billion per year by 2010.

The good news: the IMF says it does not want to create, finance or manage the Green Fund — unless, of course, a G20 decision might force the institution to do it anyway… Alas, this seems at present quite unlikely, since apparently the IMF’s Board of Directors already rejected the proposal in a formal board meeting a few weeks ago.

Given this fact (which is not acknowledged in the public information note accompanying the paper), it is even more surprising that the thought experiment has seen the light of day and was not buried, as could have happened with forward-thinking staff papers, in the cement catacombs of the IMF building. No doubt IMF Chef Dominique Strauss-Kahn’s passionate belief in the danger of climate change for long-term global macro-economic stability (of which the IMF is supposed to be the guardian) has quite a bit to do with the public ‘defiance’ by the IMF management of the 24 IMF directors’ opinion. Or the hope that the idea of a Green Fund might create so much public support so as to sway the IMF Directors’ opinion… (more…)

In the past, the International Monetary Fund (IMF) has often been accussed of “mission grab” –its attempt to gain legitimacy, relevance and more international power by assuming tasks it is not well suited for. Well, it seems to have done it again… this time with a daring proposal on climate financing.

This at least is one way to explain the announcement that IMF Managing Director Domique Strauss-Kahn made during the World Economic Forum in Davos just a few days ago that IMF staff is working on a proposal for a “Green Fund” worth billions of dollars, which should help a world shaken up by the global financial crisis to pursue a low-carbon growth strategy going forward.

The idea of a “Green Fund” with up to US$ 100 billion in just a few years sounds vaguely familiar. In fact, didn’t the Copenhagen Accord, the political declaration which kind of saved the COP15 from total failure, talk about a “Copenhagen Green Climate Fund” in just about the same amount? Indeed,seen in this light, the proposal by Mr. Strauss-Kahn almost sounds like a sales pitch: Why, if the world is so bound and intent on creating a Green (Climate) Fund, aren’t you looking at an well-established institution with a stellar reputation such as the IWF to work out the details of such a fund or administer its resources? Especially, since the head of the IMF has an idea how the US$100 billion needed can be raised, at least in part. By the way: this is a sticky point in the Copenhagen Accord: it does not address where the money could or should come from, except in a rather oblique reference to a “wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance.” (more…)