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Anna Belianska, Nadja Bohme, Kailhao Cai, Yoro Diallo, Saanya Jain, Mr. Giovanni Melina, Ms. Pritha Mitra, Mr. Marcos Poplawski Ribeiro, and Solo Zerbo
Sub-Saharan Africa (SSA) is the region in the world most vulnerable to climate change despite its cumulatively emitting the least amount of greenhouse gases. Substantial financing is urgently needed across the economy—for governments, businesses, and households—to support climate change adaptation and mitigation, which are critical for advancing resilient and green economic development as well as meeting commitments under the Paris Agreement. Given the immensity of SSA’s other development needs, this financing must be in addition to existing commitments on development finance. There are many potential ways to raise financing to meet adaptation and mitigation needs, spanning from domestic revenue mobilization to various forms of international private financing. Against this backdrop, S SA policymakers and stakeholders are exploring sources of financing for climate action that countries may not have used substantially in the past. This Staff Climate Note presents some basic information on opportunities and challenges associated with these financing instruments.
International Monetary Fund. Western Hemisphere Dept.
This paper takes stock of St. Lucia’s plans to manage climate change, from the perspective of their macroeconomic implications, and suggests macro-relevant reforms that could strengthen the likelihood of success of the national strategy. To meet its renewable energy plans, St. Lucia will need to mobilize private investment. External assistance will be needed to develop supporting infrastructure. Building capacity for project assessment and investment promotion is a high priority, to shape needed investments into bankable projects. Elsewhere, capacity-building would be most useful to help cost sectoral plans, complete the disaster-preparedness strategy, move toward carbon taxation, and strengthen skills in public investment management and public financial management.
International Monetary Fund. Western Hemisphere Dept.
Natural disasters and climate change are existential threats to Grenada, with annual losses from these events estimated at 1.7 percent of GDP. Grenada has proactively pursued resilience-building, with its Climate Change Policy and National Adaptation Plan providing detailed roadmaps for policymakers. However, the challenges are increasing, including from slow-moving effects owing to the rising sea level, even as implementation capacity and resource constraints remain significant impediments. The COVID-19 pandemic has amplified those challenges by increasing risks and tightening Grenada’s fiscal space.
International Monetary Fund. Fiscal Affairs Dept.
Grenada has made significant strides to counter climate change but meeting the daunting remaining challenges will require domestic policy actions and sustained international support. Climate change is an existential threat to Grenada. Increasing frequency and intensity of coastal storms threatens infrastructure and livelihoods, as do increased risk of coastal flooding and drought. Notably, Hurricane Ivan in 2004 caused damages of over 200 percent of GDP. Grenada has recognized this by placing climate resilience at the center of its policy making and forging strategic alliances with key global climate finance providers. However, the challenges facing the country remain daunting and will require large increases in international support, both financial and technical, to assist the Grenadian authorities turn their impressive resilience plans into action.
Anna Belianska, Nadja Bohme, Kailhao Cai, Yoro Diallo, Saanya Jain, Mr. Giovanni Melina, Ms. Pritha Mitra, Mr. Marcos Poplawski Ribeiro, and Solo Zerbo

Challenges for Sub-Saharan Africa,” IMF Staff Climate Note 2022/009, International Monetary Fund, Washington, DC. ISBN: 979-8-40022-159-0 (Paper) 979-8-40022-166-8 (ePub) 979-8-40022-340-2 (PDF) JEL Classification Numbers: F34; F35; G22; H63; Q28; Q54; Q57 Keywords: Climate finance; sub-Saharan Africa; climate change; mitigation; adaptation; concessional finance; green bonds; blue bonds; sustainability bonds; debt for climate swaps; carbon credits; climate insurance; climate funds; forest conservation; green development Authors’ email

Anna Belianska, Nadja Bohme, Kailhao Cai, Yoro Diallo, Saanya Jain, Mr. Giovanni Melina, Ms. Pritha Mitra, Mr. Marcos Poplawski Ribeiro, and Solo Zerbo

capacity to steer projects from ideation to issuance. Development partners can support SSA countries in their pursuit of the reforms above. Organizations like CAFI and the Forest Carbon Partnership Facility Readiness Fund specialize in building capacity and readiness in SSA countries. 35 Climate Insurance While not a substitute for investing in physical and financial resilience, insurance schemes are an important component of risk management. Article 8 of the Paris Agreement states “risk insurance facilities, climate risk pooling and other insurance solutions

International Monetary Fund. Western Hemisphere Dept.

Contribution IPCC Intergovernmental Panel on Climate Change IPP Independent Power Producer IPSAS International Public Sector Accounting Standards JICA Japan International Cooperation Agency LUCELEC St. Lucia Electricity Company MoE Ministry of Infrastructure, Ports, Energy and Labour MoF Ministry of Finance, Economic Growth, Job Creation, External Affairs and Public Service MTDS Medium-Term Development Strategy MCII Munich Climate Insurance Initiative NAP

International Monetary Fund. African Dept.

efforts against climate shocks and conflict. Programs targeting climate-related vulnerabilities for example, by subsidizing the premium for climate insurance services-could be integrated into the existing social protection system. Moreover, an effective social safety net should improve access to basic infrastructure, including education and health, thereby reducing the vulnerability of people, especially youth, and preventing them from joining an armed group. Increasing the effectiveness of social protection in Niger will also require taking steps to promote

International Monetary Fund. Western Hemisphere Dept.

. 60 Low-income individuals in St. Lucia are eligible for insurance from wind and excess rain through the Livelihoods Protection Policy (LPP), a weather-index based insurance policy launched by the Munich Climate Insurance Initiative (MCII) in partnership with the CCRIF in 2013. 61 Thirty-one individuals in St. Lucia received payouts totaling US$102,000 on their Livelihood Protection Policies due to Hurricane Matthew. 62 The program provides swift cash payouts following extreme weather events (high winds and heavy rain), enabling policyholders to recover quickly