Encouraging economic transformation can speed up green transition, says IMF head

Effective policies to encourage economic transformation can speed up green transition, said Kristalina Georgieva, Managing Director of the IMF.

She delivered the remark during the event held by the Atlantic Council as a part of the IMF's World Economic Outlook publication.

"Even more can be achieved with policies to encourage economic transformation — to speed up the green and digital transition. How well we handle them will define the legacy of this decade. This is particularly important for the green transition. How quickly we advance it will have tremendous significance for whether we succeed to tame climate risks. But the shift to a climate friendly economy goes beyond managing risks. It also offers tremendous opportunities for investment, jobs, and growth," she said.

The managing director noted that the economic, health and environmental benefits of transformative investments are already visible - including in renewable energy, electric mobility, and ecosystems restoration.

"For every $1 spent on fossil fuels, $1.7 is now spent on clean energy. Five years ago, this ratio was 1:1. But robust policies and institutions are needed for a stable and encouraging investment climate and to tackle a broad range of market failures," added Georgieva.

Thus, the IMF suggest that essential reforms, such as enhancing governance, reducing bureaucratic hurdles, boosting female workforce participation, and facilitating access to capital, are all pivotal. A carefully coordinated set of reforms across emerging and developing nations could potentially elevate output by 8 percent within a span of four years.