Introduction
Climate vulnerable developing countries often fail to deal with the macro-financial risks caused by climate change. The transition and physical impacts threaten their debt sustainability, development prospects, and investment attraction. International Monetary Fund (IMF) and similar organizations can support the course of such countries. V20 countries should receive comprehensive assistance to mitigate climate risks and spur development.
The Argument
Volz and Ahmed, in their paper, discuss the adverse influence of climate change on V20 states’ economies. They believe that more comprehensive and large-scale assistance from the IMF is needed to maintain sustainability. Although IMF significantly diverted its attention toward climate challenges in 2015 and concluded related research, it still lacks timely interventions within its operational activity. The survey conducted by Volz and Ahmed (2020) revealed that central banks and finance ministries representing V20 members demand more technical, analytical, and financial support from IMF. What is more, the paper provides ten recommendations for further V20-IMF Action Agenda.
The Wider Debate
The majority of studies on IOs’ roles point to the fact that their importance continues to grow. However, research conducted by McArthur and Werker (2016) highlights that IOs should quickly respond to the developing countries’ growing economic and political power by reconstructing the international order. It was found that citizens of countries involved in IOs programs trust the latter instead of their own governments. It indicates that IOs still exert enough power to influence the authorities and policies of developing countries. Political economy challenges still hinder the ability of IOs to solely solve the world’s collective challenges such as climate change (Von Borzyskowski 2016). Nevertheless, the Paris Agreement of 2016 reinforced international efforts to adopt national strategies to pursue common goals.
The Critique
The article under review provides an exhaustive list of climate change implications that may contribute to higher sovereign risk. The latter can indeed stem from climate-related disasters, mitigation policies, macroeconomic impacts, financial sector instability, and political instability. The authors also successfully identified the current high demand for IMF assistance among V20 countries that are in the early stage of analyzing possible negative implications. Nevertheless, the paper looks too ambitious concerning recommended steps and prospects of cooperation. The reviewed literature shows the slow adaptation of IOs to the new power distribution and hindered response to collective challenges.
Conclusion
To conclude, IMF is going to play a critical role in dealing with the economic effects of climate change on vulnerable countries. It started to develop capacity and strategy to assist the V20 states. The reviewed paper provides important insights into the research area; however, it is too optimistic and lacks practical actions. The near future will show if IOs are capable of consolidating international players.
References
McArthur, John, and Eric Werker. 2016.”Developing Countries and International Organizations: Introduction to the Special Issue.” The Review of International Organizations, no. 11: 155-169. Web.
Volz, Ulrich, and Sara Jane Ahmed. 2020. “Macrofinancial Risks in Climate Vulnerable Developing Countries and the Role of the IMF–Towards a Joint V20-IMF Action Agenda.” The paper prepared for the V20 to support the development of a V20-IMF Joint Action Agenda.
Von Borzyskowski, Inken. 2016. “Resisting Democracy Assistance: Who Seeks and Receives Technical Election Assistance?.” The Review of International Organizations 11(2): 247-282. Web.