The IMF’s Resilience and Sustainability Facility (RSF) has operated for two years, initiating programs in 20 countries, including successful implementations in Costa Rica and Jamaica. While the RSF meets its objectives, the ambition of implemented reforms is often low, raising questions about overall success and effectiveness in catalyzing climate finance. Future improvements are anticipated with new guidelines enhancing program ambitions and a focus on integrating pandemic preparedness support amidst ongoing challenges.
The International Monetary Fund’s (IMF) Resilience and Sustainability Facility (RSF) has been operational for two years, aiming to finance initiatives aimed at climate change mitigation and adaptation across various nations. To date, the RSF has initiated programs in 20 countries, completing two programs in Costa Rica and Jamaica. This assessment evaluates whether the RSF is fulfilling its intended goal of effecting impactful reforms. Although the programs are generally achieving their objectives, their overall ambition appears to be lacking, leading to challenges in labeling them as successful. A primary goal of the RSF is to stimulate climate finance; however, thus far, no significant progress has been evidenced in this area. Furthermore, the RSF is designed to bolster pandemic preparedness; nevertheless, no participating countries have sought assistance in this regard, a situation that could potentially alter following a recent tripartite agreement involving the IMF, World Bank, and World Health Organization (WHO) focusing on pandemic preparedness. Upon evaluating RSF programs, it becomes evident that they are on track with their developmental goals. Completed reviews of RSF programs, numbering 29 across 18 countries, have successfully implemented 79 reform measures (RMs), with only a marginal delay in six of them—amounting to seven percent of the total. Delays occurring in certain cases, notably in Niger due to a recent coup d’état disrupting governmental reform efforts, have since been addressed with the provision of technical assistance from the IMF. Meanwhile, Paraguay has experienced delays due to the necessity for extensive private sector consultations regarding energy-efficiency standards. Despite meeting objectives, the depth of the reforms implemented indicates a tendency towards low-impact, incremental changes rather than immediate, transformative results. This pattern may be indicative of the RSF’s approach, where programs tend to yield more substantive measures in later stages. However, recent guidance from the IMF aims to elevate the ambition levels of future programs through the inclusion of medium- and high-depth measures intended to yield significant and enduring impact. With regard to catalyzing climate finance, the RSF has facilitated the implementation of climate finance-focused reforms, estimating that 13 climate finance RMs have been executed within four out of the five pilot countries—Bangladesh, Costa Rica, Jamaica, and Rwanda. Nonetheless, it is important to note that these have predominantly been low-depth initiatives. Initial evaluations reveal that a climate finance-oriented ‘halo effect’ has yet to emerge, as evidenced in an interim review from June 2024, which stated that the RSF has primarily complemented existing financial efforts rather than drive new climate financing. The evaluation further highlighted the absence of private climate finance flows in countries like Barbados and Jamaica during their initial program phases. In the context of completed RSF programs, both Costa Rica and Jamaica undertook relatively brief and unambitious initiatives, each spanning approximately 18 months. They executed 12 RMs, characterized mainly as low-depth measures, drawing fully on the IMF quota allocated to them. Early indications suggest a potential positive outcome in Costa Rica with new regulations facilitating private participation in renewable energy generation leading to an influx of operators; however, broader transformational impacts are projected to materialize over several years. Furthermore, the recent development of new guidance in collaboration with the IMF, World Bank, and WHO enhances the likelihood of integrating pandemic preparedness measures into RSF programs, addressing previous gaps in health priorities. While this presents new opportunities, other barriers may still hinder countries from adopting these measures. In conclusion, acknowledging the nascent stage of the RSF is critical, as achieving substantial results through reform takes time. The IMF’s focus on achieving primarily low-depth measures has hindered the ability to demonstrate measurable outcomes thus far. Moving forward, the IMF should emphasize showcasing the impact of reforms and effectively evaluating whether it is successful in mobilizing climate finance while strategically balancing the allocation of RMs between climate initiatives and strengthening pandemic preparedness in member countries seeking assistance.
The Resilience and Sustainability Facility (RSF), introduced by the IMF, aims to provide financing for countries to combat climate change and boost resilience against environmental challenges. This innovative program operates in the context of the increasing urgency surrounding climate issues, as well as the emerging global need for pandemic preparedness. The first two years of RSF operation cover its expansion into 20 countries, with completion of programs in Costa Rica and Jamaica, allowing for an evaluation of its effectiveness in driving reforms and catalyzing climate finance. The RSF’s goals center around impactful reforms, financial mobilization, and integration of pandemic preparedness, providing a valuable framework of analysis regarding its success and obstacles encountered.
In assessing the RSF’s two-year performance, it is evident that while the program meets its initial objectives, its overall impact remains limited primarily due to the execution of low-depth reforms. The wait for catalyzed climate finance and pandemic preparedness integration underscores the necessity for continued evolution and adaptation of the RSF framework. Future efforts should prioritize ambition in reform measures and seek to achieve tangible results that resonate over the longer term to fully realize the RSF’s potential in advancing climate resilience and sustainability across participating nations.
Original Source: www.cgdev.org
