Wait, the IMF did something?

Imagine you were competing in a hundred meter sprint but your competitor starts fifty metres ahead. For emerging economies, talk around climate change can feel a lot like that.

More economically developed countries emitted loads of emissions as they industrialised. Now emerging economies are playing catch up but they’re being told off for their emissions. If you ask me, that seems pretty unfair.

Enter the IMF’s Resilience and Sustainability Trust

The IMF’s Resilience and Sustainability Trust (honestly the names never get any better…) was set up last year to:

The above isn’t just a fancy headline for the papers - it comes with $$$ attached.

The RST provides loans to emerging economies to combat the disproportionate impact of climate change. In the last six months Jamaica, Costa Rica, Barbados, Rwanda, and Bangladesh have had loans approved totalling $3.4 billion which on paper seems like a lot of money.

Each country has their own plans for how they’ll use the funding. Some will give incentives to switch to renewables, others are using them to build green financial instruments. But, there’s no such thing as free money.

There are strings attached: getting access to the moolah includes dependencies on other IMF projects, austerity measures, and energy reforms. Experts worry that this means the funds will never serve their intended purpose.

Worse still, many countries that need funding most urgently will never have access to the RST. The funding comes in the form of loans, and those loans have to be paid back. The major criticism is that those who truly need the funding will be ignored due to their historical inability to pay back debt.

The RST is looking to deploy $30-50 billion over the next couple of years. However, the UNEP estimates that $340 billion will be needed annually to adapt to climate change. We’re going to need a lot more funding to get anywhere. With this context, the RST is a drop in the ocean, and that ocean just keeps rising.