Never waste 'a crisis': IMF chief sees coronavirus as 'great opportunity' to create a green economy

by Joel Gehrke | April 27, 2020 02:53 PM

Environmentalists have an unprecedented chance to turn their policy hopes into a global reality during the economic crisis caused by the coronaviru s pandemic, according to the head of the International Monetary Fund.

“You know, a crisis [is] never to be missed as an opportunity to do better,” IMF managing director Kristalina Georgieva said Monday.

Georgieva, a Bulgarian economist who took over as IMF chief last year, has a prominent role influencing how countries soften the economic blows delivered by the pandemic. She is also working on strategies to “jump-start economies” after the contagion passes. She favors a “coordinated fiscal stimulus that can generate a new momentum for the world economy,” crafted with an eye on climate change as well as the coronavirus crisis.

“Look, Mother Nature is not going to let us forget that climate change is a major risk to the well-being of people and the well- being of economies,” she told the Atlantic Council via videoconference. “Right now, we are concentrated on the immediate emergency, and rightly so, but as we deal with COVID-19 and we restart economies, it is a great opportunity to see what are the policies that we can put in place and even accelerate so we can [see] climate-friendly growth in the future.”

The opportunity for environmentally-minded policymakers derives in part from the global nature of the response to the pandemic, which means that green policies developed now could see wider adoption than any prescription spurred by an environmental disaster.

“The pandemic is unique because it hits everybody at the same time,” she said. "Climate disasters affect different regions at different moments, but in their aggregation, they are quite significant.”

The oil industry could be ripe for a sea change, Georgieva suggested, given that falling demand and a price war between Russia and Saudi Arabia have dragged crude oil prices to historic lows.

“So what are the areas we can pursue?” she mused. “Well, oil prices are very low — very good moment to phase out harmful subsidies, taking advantage of these low oil prices.”

She suggested that the pandemic-driven pressure on food supply chains could provide “a good reason to move into green agriculture, sustainable agriculture,” and even suggested that people who “have difficulty to service their mortgages” could be incentivized to adopt green energy practices.

“What if we decide to have a program that if you retrofit your house, you get a discount on how you service your debt or you have a prolongation of servicing that debt?” Georgieva suggested. “There are many policy ideas that can serve us really well, so we come in a way better off.”

Policymakers have no choice but to plan for such a future, the finance chief maintained. “If we don't, then we are going to see an acceleration of another type of risk, and it is the climate risk,” Georgieva said.