site.btaIMF Managing Director Kristalina Georgieva: Climate Crisis Is Causing Severe Disruptions in Lives and Livelihoods

“The climate crisis is already causing severe disruptions in lives and livelihoods. With just 1.1 degrees Celsius of warming, half the global population faces water insecurity at least one month per year. And this is particularly strongly felt in this region,” said International Monetary Fund (IMF) Managing Director Kristalina Georgieva. She was addressing the World Government Summit in Dubai at a launch event for the latest IMF analysis on Climate Change in the Middle East and Central Asia, “Feeling the Heat: Adapting to Climate Change in the Middle East and Central Asia”.

Over the past two decades, the frequency and severity of climate‑related disasters in the region have been rising faster than anywhere in the world. The economic and financial implications of these climate impacts are a major threat to growth and prosperity in the region, the IMF analysis shows.

Climate disasters in the Middle East and Central Asia have injured and displaced 7 million people and caused more than 2,600 deaths and 2 billion dollars in physical damages. Extreme weather events typically cut annual economic growth by 1–2 percentage points per capita. In the Caucasus and Central Asia subregion, they even caused a permanent loss in the GDP level of 5.5 percentage points, the paper found further.

Today’s climate challenges are already exacting a heavy toll. And even accounting for significant global cuts to emissions, by 2050, average summertime temperatures could exceed 30 degrees Celsius in half of the region’s countries, Georgieva said.

The steps the IMF recommends for the countries  to adapt their economies and societies to this daunting challenge include:

First, all countries need to drastically reduce emissions to stabilize global temperatures and make the adaptation challenge more manageable. To “keep 1.5 alive”, global emissions should be cut by one half by 2030. To get there we recommend a steadily rising carbon price—including by equivalent non-pricing measures—together with green investments, and actions to ensure a just transition across and within countries. Here, the UAE has led regional efforts with its pledge to invest more than 160 billion dollars in renewables to achieve net zero carbon emissions by 2050.

Second, prioritize high-value, “no-regrets” risk management measures justified under all plausible future climate scenarios while building adaptative capacity for future change. 

Third, mainstream adaptation policies into national economic strategies, particularly in macroeconomic frameworks which should fully reflect climate risks.

These measures require additional effort. The public infrastructure investment needs may amount to up to 3.3 percent of GDP per year for individual countries in the region over the next 10 years, more than twice the emerging market average. 

But overall, fiscal space is limited in many Middle East and Central Asian countries, particularly in the aftermath of the pandemic. Adaptation to boost resilience to future climate-related disasters needs a mix of domestic policy reforms and greater international support.

On the domestic side, countries could start by mobilizing revenue, increasing efficiency and reprioritizing public spending. On the international side, a good start would be for advanced economies to meet (or exceed) the goal of providing $100 billion a year in climate finance to developing countries.

The IMF is stepping up its engagement on climate by helping countries strengthen their ability to integrate climate in their macro-financial policies, through analytical, surveillance and capacity development work. For example, the forthcoming World Economic Outlook will include a chapter on creating green jobs, the IMF Managing Director pointed out.

IMF setting up a new Resilience and Sustainability Trust that would aim to address macro-critical longer-term structural challenges to vulnerable member countries—including climate change.

In conclusion, Georgieva said this year international attention on climate issues is squarely focused on the Middle East. Egypt will host COP27 in November, and in 2023 it will be United Arab Emirates’ turn.