In 2015 the IMF and World Bank announced its ‘billions to trillions agenda’ a developmental framework which recognised that market forces alone would fail to build crucial infrastructure in Developing Economies. Instead, there had to be an active programme by states to spend public resources to try and ‘de-risk’ and crowd-in private investment. Ten years on, the ‘Billions to Trillions’ agenda has been a dismal failure. Over the same period, tackling climate change has moved steadily up the priority list for IOs. Indeed, under the last two managing directors, the IMF has placed itself increasingly at the heart of efforts to mobilise finance for tackling climate change. Though policy and regulatory activism that brings together public and private sector actors, the IMF hopes to create what it calls the ‘enabling environment’ for private climate finance. In that way, what was once the ‘infrastructure finance gap’ is now a ‘climate finance gap’. Climate finance in all its variety and complexity, as a way to analyse the difficulties facing efforts to reconcile financing environmental sustainability with the structure of the contemporary global macro-financial regime. In Fund flagships, private climate finance is mooted as the solution to the ‘financing gap’. Nevertheless, in the wake of shortcomings of the Billions to Trillions agenda, the IMF more broadly has come to recognise significant limitations with private finance. 

In response, the Fund has developed a perspective on climate finance that embraces the active curation of market mechanisms. Continuing with the IMF’s departure from Washington Consensus, we show how it recognises global finance will not support climate investment without intervention from states and curation from international organisations. We argue that the IMF’s attempt to mobilise climate finance belongs within a tradition of supply-side Keynesianism. In this, governments play a central role in brokering partnerships with private financiers and developers in the pursuit of public purpose. In contrast to the neoliberal ‘supply-side’ policies of the Washington Consensus era, which saw liberalisation, privatisation and austerity as sufficient conditions for private finance to flow, supply side Keynesianism sees state and global governance institutions actively trying to curate, design and direct markets towards political ends. However, as we show, the expansive market design agenda, developed in parts of the Fund, pushes beyond the bounds of IMF’s mandate, its authority, and its traction with governments. It is not in the IMF’s gift to re-order the global financial system. For one thing, such a move would require major Board-level endorsed changes to IMF’s mandate and resources. Therefore, we argue the IMF’s reach towards its ambitious climate finance vision thus exceeds the Fund’s grasp.

Speaker

Ben Clift, University of Warwick

Collective Discussion

Chair 

Matthias Thiemann, Sciences Po, CEE