Primer for Climate-related Engagement with the IMF

The Resilience and Sustainability Facility (RSF), the operational arm of the IMF's Resilience and Sustainability Trust (RST), provides long-term concessional loans to low- and middle-income countries (LMICs) to implement macro-critical climate reforms. While the RSF creates fiscal space and improves investment conditions, its impact is often hindered by limited engagement with sectoral ministries, overlapping climate initiatives, and inconsistent coordination with development partners like the World Bank and regional development banks. The document recommends institutionalizing inter-ministry platforms, aligning RSF reforms with national climate plans, and utilizing joint diagnostic tools. It also highlights the role of IMF Climate Finance Roundtables in aligning investments with national priorities, though these have yet to mobilize significant private capital. Case studies from Bangladesh, Barbados, and Senegal illustrate both the potential and the challenges of these coordination mechanisms.

• 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, with a 20-year maturity and a 10.5-year grace period.
• Coordination between finance and sectoral ministries is often a bottleneck; 45% of IMF mission chiefs and 33% of national authorities reported difficulties in coordinating across ministries and agencies.
• RSF reforms frequently lack depth, with an initial assessment by the Center for Global Development (CGD) in March 2023 finding that approximately 80% of fiscal reforms and 90% of non-fiscal reforms were 'low depth,' focusing on procedural rather than substantive policy changes.
• The World Bank's Country Climate & Development Reports (CCDRs) are critical inputs for RSF design, but were unavailable at the time of approval for more than half of the recipient countries.
• IMF Climate Finance Roundtables aim to align macro-critical reforms with investment flows, but their implementation is inconsistent; as of October 2024, only ten roundtables had been held for the 21 countries with signed RSF agreements.
• Despite the use of Climate Finance Roundtables, the RSF has not yet mobilized meaningful private financing, with countries like Barbados and Jamaica securing none.
• Effective coordination can lead to significant funding; Bangladesh used a programmatic approach via its Climate and Development Platform to secure policy-based lending commitments exceeding USD 1.85 billion from partners including the ADB, AFD, World Bank, and AIIB.
• The IMF and Inter-American Development Bank (IDB) have a formalized cooperation model in Latin America and the Caribbean that serves as a potential blueprint for other regional development banks.

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} }