Financing for Sustainable Development: Money and the Right Policies

By Min Zhu and Sarwat Jahan

(Versions in Español,  عربي)

Countries will start a new chapter in their development this year with the United Nation’s Sustainable Development Goals. Designed to replace the Millennium Development Goals, these new goals will broaden the vision of development to embrace economic, social, and environmental issues. To achieve these goals, two elements are critical: money and the right policies to use the money. The IMF, along with many others in the global community, will partner with countries to bring these two elements together.

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Act Local, Solve Global: The $5.3 Trillion Energy Subsidy Problem

By Benedict Clements and Vitor Gaspar

(Versions in 中文, Français日本語Русский and Español)

US$5.3 trillion; 6½ percent of global GDP—that is our latest reckoning of the cost of energy subsidies in 2015. These estimates are shocking. The figure likely exceeds government health spending across the world, estimated by the World Health Organization at 6 percent of global GDP, but for the different year of 2013. They correspond to one of the largest negative externality ever estimated. They have global relevance. And that’s not all: earlier work by the IMF also shows that these subsidies have adverse effects on economic efficiency, growth, and inequality.

What are energy subsidies

We define energy subsidies as the difference between what consumers pay for energy and its “true costs,” plus a country’s normal value added or sales  tax rate. These “true costs” of energy consumption include its supply costs and the damage that energy consumption inflicts on people and the environment. These damages, in turn, come from carbon emissions and hence global warming; the health effects of air pollution; and the effects on traffic congestion, traffic accidents, and road damage. Most of these externalities are borne by local populations, with the global warming component of energy subsidies  only a fourth of the total (Chart 1).

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The Power of Cooperation

by iMFdirect

The planet’s most successful species are the great cooperators: ants, bees, termites, and humans.

In an article in the new issue of Finance & Development magazine, President Bill Clinton shares his experience working with governments, business, and civil society as part of his Clinton Global Initiative.

He says they are making the most progress in places where people have formed networks of creative cooperation where stakeholders come together to do things better, faster and cheaper than any could alone.


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