Consultation paper: Integrating climate adaptation and natural capital into macroeconomic frameworks and debt sustainability

This paper highlights the macroeconomic impacts of climate change and nature loss on vulnerable economies and proposes integrating climate adaptation and natural capital into debt sustainability frameworks. It emphasises the need for equitable financing, nature-based solutions, and investments that enhance resilience without increasing debt burdens.

While the IMF is starting to pay greater attention to climate change, including in its baseline GDP growth forecasts and the Debt Sustainability Analysis (DSA) – it could adopt a more comprehensive approach to these issues.

The discussion paper analyses five gaps in the current DSA and underlying GDP growth forecasts methodology in terms of climate adaptation, natural capital and debt sustainability.

The paper also lays out three practical proposals to reform the Fund's key macroeconomic frameworks and the DSA.