IMF ties environment to restoring European growth
WASHINGTON – IMF chief Christine Lagarde tied saving the environment to restoring growth in Europe, saying Tuesday that green development cannot get going while advanced countries are stuck in crisis.
Speaking ahead of the June 20-22 UN Conference on Sustainable Development, the Rio+20 Summit, Lagarde said that environmentally friendly growth cannot be disconnected from restoring fiscal health and growth in the advanced countries.
“Today, I believe that we are facing a triple crisis – an economic crisis, an environmental crisis, and, increasing, a social crisis,” she said in an address at the Centre for Global Development in Washington.
“The global economy is still rocked by turmoil, with uncertain prospects for growth and jobs.”
“We must start with the basics – from a platform of restored economic stability and growth. From that base, we can achieve green growth and inclusive growth – the building blocks of our sustainable and equitable economic future.”
Lagarde, whose main burden in the past year has been wrestling with the eurozone’s financial crisis – and the tensions between stabilising weak euro area countries and restoring growth – admitted the International Monetary Fund is not an environmental organisation.
But, she added, “we cannot ignore the extensive human suffering and the misallocation of resources that leads us down the wrong path”.
More deterioration of advanced economies could damage currently fit developing countries, setting back their attempts at sustainable growth.
To foster sustainable, green economies, she said, “first and foremost, we need to get growth going again”.
“This must start with the advanced economies, especially in Europe. Policymakers need to take decisive steps to break free of the crisis.”
The IMF managing director conceded that economic growth “can potentially harm the environment and that environmental degradation can in turn hurt economic performance. We need to get the green economy right”.
A key then is fostering policies that are “good for stability and good for growth,” including properly pricing the costs of pollution and other destructive activities.
Getting such prices right is “the best and most comprehensive route to reducing environmental damage”.
She also stressed “inclusive growth” that creates jobs and helps reduce inequality.
“Options here include reducing tax evasion and avoidance,” she said, repeating an issue she has made repeatedly about Greece as it struggles to implement its 130 billion euro (US$160 billion) EU-IMF bailout.
On Monday she told CNN television: “I think that tax compliance is a necessary tool to restore any country’s situation – Greece, like others.”