COP16: IMF loans linked to deforestation equivalent to the size of the Maldives – New Report

October 22, 2024

By Samuel Ogunsona

A recent study by the Task Force on Climate, Development has uncovered a disturbing association between IMF programs and deforestation.

The research reveals that each IMF loan is linked to a decrease in forest area of approximately 258 square kilometers, roughly the size of the Maldives.

The study analyzed 35,915 conditions imposed by the IMF on low- and middle-income countries over the past four decades and found that only 34 explicitly addressed forest management.

Furthermore, between 2000 and 2020, IMF programs were associated with a 9.2% increase in annual deforestation rates.

While IMF programs do not directly aim to increase deforestation, they often lead to borrowing countries extracting economic value from deforestation as a means of fiscal consolidation.

This suggests that some deforestation in emerging markets and developing economies may have occurred due to IMF programs.

The Task Force emphasizes that international financial institutions must consider environmental impacts in their program design to align with the Paris Agreement.

As the leading global financial institution, the IMF plays a crucial role in promoting climate resilience and low-carbon economic transitions.

The study’s findings underscore the need for the IMF and other international financial institutions to prioritize environmental considerations in their lending practices.