Primer for Climate-related Engagement with the IMF

This guide by the Climate Policy Initiative (CPI) examines the International Monetary Fund's (IMF) Resilience and Sustainability Facility (RSF), the operational arm of the Resilience and Sustainability Trust (RST). It provides recommendations for low- and middle-income countries (LMICs) to improve coordination between finance ministries, sectoral ministries, and international development partners to better integrate climate risks into macroeconomic policy and catalyze climate finance.

• The Resilience and Sustainability Facility (RSF) provides long-term, concessional financing to low- and middle-income countries (LMICs) to support policy reforms that reduce macroeconomic risks from climate change and pandemics. As of April 2025, the RST has disbursed USD 9.5 billion (SDR 7.1 billion) to 23 countries from a total pledged amount of USD 46.8 billion (SDR 35.8 billion).
• RSF implementation is often hindered by limited engagement of sectoral ministries and a lack of coordination between macro-fiscal policy and climate initiatives. For example, in Senegal, weak coordination between the RSF program and the Just Energy Transition Partnership created challenges in aligning these initiatives with national priorities.
• National governments can improve RSF effectiveness by institutionalizing inter-ministry platforms and aligning reforms with national climate plans. Examples include Bangladesh's National Committee for Environment and Climate Change, established in 2023 and chaired by the Prime Minister, and Barbados's use of the Economic Recovery and Transformation Plan 2022 (BERT 2022) to lay the foundation for RSF measures.
• The IMF and World Bank utilize complementary diagnostic tools to inform RSF programs. World Bank Country Climate & Development Reports (CCDRs) provide sector-specific insights, while the IMF's Climate Public Investment Management Assessment (C-PIMA) and Climate Policy Diagnostic (CPD) focus on macroeconomic and institutional reforms. However, less than half of RSF recipient countries had a CCDR at the time of their RSF approval.
• Coordination between the IMF and World Bank is often fragmented due to different engagement targets—the IMF focuses on finance ministries while the World Bank engages sectoral ministries. This can lead to policy mismatches, such as the IMF promoting carbon taxes while the World Bank focuses on renewable energy investment without alignment on how revenues support the transition.
• Regional Development Banks (RDBs) and bilateral DFIs provide critical technical assistance and financing, but their engagement with the RSF is uneven. The IMF-IDB collaboration in Latin America and the Caribbean is cited as a successful model for integrating climate considerations into financial policies, whereas cooperation with the African Development Bank (AfDB) is described as limited.
• The IMF uses Climate Finance Roundtables to align macro-critical reforms with investment flows and mobilize resources. As of October 2024, only ten roundtables had been held for the 21 countries with signed RSF agreements. These have been conducted in Barbados, Rwanda, Costa Rica, Jamaica, Bangladesh, Kenya, Sénégal, Benin, Côte d’Ivoire, and Paraguay.
• RSF reforms have struggled to catalyze significant private sector investment, with many reforms focusing on procedural rather than structural changes. An initial assessment by the CGD in March 2023 found that approximately 80% of fiscal reforms and 90% of non-fiscal reforms in RSF arrangements were of 'low depth'.
• Case studies show that coordinated efforts can attract substantial funding: Bangladesh secured policy-based lending commitments exceeding USD 1.85 billion from partners including the ADB and World Bank, and Rwanda's Ireme Invest facility is expected to attract EUR 300 million (USD 326 million) from development partners.

APA

Yahmed, Z. B., Khanna, M., Peres, T., Grant, C., & Sharma, J. (2025). Primer for Climate-related Engagement with the IMF. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/04/Primer-for-Climate-related-Engagement-with-the-IMF.pdf

Chicago

Yahmed, Zeineb Ben, Mridhu Khanna, Taarika Peres, Chris Grant, and Jyoti Sharma. Primer for Climate-related Engagement with the IMF. Climate Policy Initiative, 2025. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/04/Primer-for-Climate-related-Engagement-with-the-IMF.pdf.

Wikipedia

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BibTeX

@techreport{yahmed2025primer, author = {Yahmed, Zeineb Ben and Khanna, Mridhu and Peres, Taarika and Grant, Chris and Sharma, Jyoti}, title = {{Primer for Climate-related Engagement with the IMF}}, institution = {Climate Policy Initiative}, year = {2025}, month = apr, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2025/04/Primer-for-Climate-related-Engagement-with-the-IMF.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }