Climate change: The IMF is also responsible

A report titled "Gasoline on fire: debt and climate change in Argentina", prepared by CONICET in collaboration with the Association of Citizens for Equality and Justice (ACIJ), established a direct link between public debt and environmental damage.

"Gasoline on fire: debt and climate change in Argentina” is a report prepared by CONICET researchers in collaboration with the Civil Association for Equality and Justice, which denounces the direct link between public debt and climate change.

On February 23, 2023, the Punilla Valley was filled with young people from all over the country who gathered for two days to listen to a series of band performances among the mountains and landscapes of Cordoba. Eight months later, while a new group of young people was preparing to travel to another edition of Cosquín rock, the valley caught fire again.

In this province alone, nearly 7.645 hectares have burned this year and the warmest days are yet to come. Questions are once again arising about what will happen in this new summer, which is expected to be the warmest on record.

climate change
Mobilization against Bolsonaro's policies due to deforestation and fires in the Amazon - Embassy of Brazil, CABA - 23/08/2019 - Camila Godoy / ANCCOM

Report on the connection of climate change and the IMF

Francisco Cantamutto, graduate student in economics, and Juan Pablo Bohoslavsky, doctor of Law, prepared a report that shows the connection between climate change and external debt or the lack of an environmental policy to find other "more urgent" issues. The point is simple: “93% of countries affected by the climate crisis are in a debt crisis or at high risk of falling into one“Cantamutto said when presenting the report to ACIJ. "Climate change creates very specific investment needs that are not always accessible to governments in terms of adaptation and mitigation", he claimed.

As in the case of environmental protection, the state budget only allocates 0,4% of GDP, while 3% goes to pay the debt with the IMF. In this regard, Cantamutto commented: "The IMF plays a catalytic role in terms of debt management, because it operates by expressing with complete openness the demands of the rest of the creditors, and through its recommendations and its audit it functions as a signal for the rest of the investors, both official and private.s". But this is not the only consequence of the agreement: "The main path chosen by the International Monetary Fund is to play a mediator role and force countries to join this path of private investment", he claimed.

This is not just an Argentine problem. The report shows that these are the countries of the so-called "global periphery" that have the most problems not only with the financing of pro-ecological policies but also with policies that spend most of their GDP on paying debts. This is an issue that was evaluated in 1994 by the United Nations Framework Convention on Climate Change, in which the great powers signed an agreement in which they committed to economic cooperation on environmental issues in Third World countries. .

In the COP15 held in Copenhagen in 2009, a common climate finance target of around $100.000 billion a year starting in 2020 was agreed. Currently, it is estimated that less than a quarter of the allocated amount has been spent and almost three quarters of this amount have been provided in the form of loans, adding to the debt levels of most countries.

Debt is not only a problem for the poor but it does represent a necessary percentage of GDP for countries with more difficult economies, where it would be better to invest the debt in improving people's quality of life, guaranteeing respect for human rights and adequate industrialization with jobs without affecting the future of people.

“It is not only at the time of payment that the debt generates an impact in terms of the possibilities of states to act against climate change, but it also does so by demanding or proposing, by creditors, structural reforms. And modulate in this way, through economic policies, the form that growth takes,” said Francisco. This is not a coincidence, because "most of them are countries on the periphery or in the global South, which - however they are defined - are more specialized in different production models. The export of goods has an extractive nature and is not associated with a process of structural change based on a fair socio-energy transition", summarizes Cantamutto.

The authors conclude the report with a series of recommendations that should be taken into account to mitigate the irreversibility of climate disasters of a certain scale. Among its proposals is the requirement that high-income countries meet economic commitments to help other low-income countries and that the support be effective and not come at the expense of other low-income countries, incorporate considerations of environmental harm and risk in debt sustainability analyses, especially in IMF analyses; and move towards progressive tax reform to improve tax collection capacity and reduce dependence on debt.

All recommendations can be found in the report "Naphtha on fire. Debt and Climate Change in Argentina”, can be found on the website of ACIJ.

By Ariadna Menedin, for UBA Communication Sciences News Agency (ANCCOM).


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