The International Monetary Fund is calling on member governments to spend big and create millions of jobs with long-term infrastructure projects, particularly green infrastructure, even as many of the world’s leading businesses urge the G20 countries to step up in response to the climate crisis.
In a statement ahead of its annual meeting later this month, the IMF “said the boost to jobs would be especially strong if governments planned for a green recovery,” while pointing to historically low interest rates as a catalyst for public sector borrowing, The Guardian reports.
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The agency’s analysis “showed that increasing public investment by 1% of national output would create seven million jobs directly, and between 20 and 33 million jobs via the knock-on effects on the rest of the economy,” the paper adds. “Public investment had the potential to generate between two and eight jobs directly for every $1 million spent on traditional infrastructure, and between five and 14 jobs for every $1 million spent on research and development, green electricity, and efficient buildings, the IMF said.”
A day later, the B20, which Business Green describes as the “official voice of the global business community to the G20”, released 25 recommendations aimed at “kickstarting the global economy in the wake of the COVID pandemic”. The release “places a strong emphasis on tackling climate change, mitigating its effects, and paving the way for carbon neutrality.”
The B20 said it based its recommendations on input from 650 different businesses over the last year.
“The opportunity is to ‘build back better’, with real urgency required from policy-makers and business leaders,” said B20 Saudi Arabia Chair Yousef Al-Benyan. “I urgently call on the G20 Leaders to adopt these policy recommendations in order to prevent the pandemic from causing further damage, while setting the foundation for a more equitable world.”
(Not that the G20 is likely to listen while Saudi Arabia holds the chair: Earlier this month, a meeting of G20 energy ministers endorsed fossil industry bailouts, contained not a single use of the word “climate”, made no reference to the G20’s now 11-year-old promise to phase out “inefficient” fossil fuel subsidies, and endorsed the host country’s perverse definition of a “circular carbon economy” that is long on unproven carbon capture technologies and short on meaningful commitments to actual decarbonization.)
The B20 companies are set to present their recommendations to the G20 during a virtual summit October 26-27, Business Green says, “at a time when a number of leading governments have developed ambitious green recovery plans in a bid to revive their economies and put the world on track to meeting the goals of the Paris Agreement.” The IMF, meanwhile, is pressing those governments to put serious investment dollars behind their action pledges.
“Empirical estimates based on a cross-country data set and a sample of 400,000 firms show that public investment can have a powerful impact on GDP growth and employment during periods of high uncertainty—which is a defining feature of the current crisis,” the IMF said. Increasing public investment by 1% of GDP, the agency added, could increase GDP itself by 2.7%, employment by 1.2%, and private investment by 10%.
