Monitoring Desk
ISLAMABAD: The head of the IMF on Friday warned that the developing world’s economies were likely to suffer from Western subsidies in light of combatting climate change and encouraging a transition to clean energy sources.
Speaking at the World Economic Forum summit in Davos, Kristalina Georgieva said that “in principle” it was a good step to provide public money and increase private investment to speed up the transition to a green economy, however, these steps may not “serve well” the developing world and the emerging markets.
The Inflation Reduction Act (IRA) passed by United States President Joe Biden includes numerous tax cuts and subsidies that amount to around $370 billion in order to reduce greenhouse gas emissions. The IRA is the largest-ever US plan to fight climate change.
The European Union is considering a response as after the IRA there are fears businesses may move production and factories to the US.
IMF head issues warning on climate subsidies
IMF’s Georgieva stated that the subsidies could lead to production and technology transfers from less-rich emerging countries to the rich world. She stated that if the aim remains to make the “industrialized world clean” without thinking about the emerging world, then “all of us are cooked”.
