Safeguarding Decades of Development: The International Monetary Fund’s Role in Addressing Loss and Damage

Executive Summary

Climate-induced loss and damage can affect the macroeconomic health and general well-being of climate vulnerable economies, rolling back decades of development gains. For members of the Vulnerable 20 Group of Finance Ministers (V20) alone, climate-induced losses amounted to 20 percent of their gross domestic product (GDP) over the last two decades.

The United Nations Framework Convention on Climate Change (UNFCCC) has adopted a two-pronged approach to financing loss and damage. First, governments agreed to establish a dedicated Loss and Damage Fund, with negotiations by the Transitional Committee set to conclude by the 28th UN Climate Conference (COP28) in Dubai. Second, governments agreed to invite international financial institutions to incorporate loss and damage into their work. As the global institution charged with maintaining fiscal and financial stability, the International Monetary Fund (IMF) has an important role to play in addressing climate-induced loss and damage.

The policy brief from the Task Force on Climate, Development and the IMF proposes a ‘loss and damage package’ at the IMF that spans its surveillance, lending toolkit and global policy coordination.

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