The International Monetary Fund can play a role in protecting the planet from environmental damage, IMF head Christine Lagarde said on Tuesday, as she highlighted how an analysis of the harmful effects of energy subsidies could act as a catalyst for action.
Lagarde’s speech at the United Nations on Tuesday was the most direct example yet of the IMF’s foray into focusing on climate change, after it published a research paper on energy subsidies in March.
“The IMF is not an environmental organization, but we can help here,” Lagarde said, according to prepared remarks at a U.N. forum on sustainable development. “One example is by trying to shine a light on the murky cobweb of energy subsidies.”
The IMF has made a bigger push in recent years to urge countries to rein in energy subsidies, which rarely help the most vulnerable people in a country and eat up valuable government money that could be better put to use for education or health care.
Lagarde said subsidies totaled nearly $2 trillion in 2011, or 2.5 percent of the world’s GDP. The top three global subsidizers are the United States at $502 billion, China at $279 billion, and Russiaat $116 billion.
“Taking action on this issue alone — energy subsidies — would be good for the budget, good for the economy, and good for the planet,” she said.
The IMF analyzes the economies of each of its 188 members and offers advice on government budget and monetary policies. It is also a lender of last resort, tasked with supporting global financial stability.
In her speech, Lagarde said tackling economic instability is impossible without also addressing environmental damage and inequality, two areas the IMF has not traditionally focused on.
In remarks to journalists in August, Lagarde said lack of attention to climate change was one of two issues that kept her up at night. The other was high global unemployment.
The IMF plans to hold a joint seminar on climate change with the World Bank during their annual meetings in early October.
The poverty-fighting World Bank, a multilateral development lender, also wants more focus on the harmful effects of climate change. It says a warmer world will hurt the poor and developing countries most of all.
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