June 30, 2025—A new policy brief authored by Daniel Titelman, Marilou Uy, and Amar Bhattacharya from the Task Force on Climate, Development, and the International Monetary Fund (IMF) calls for urgent reforms to the international financial and global tax architectures in order to support the mobilization of financing to achieve climate and development goals. 

Emerging and developing economies are facing a critical challenge. They require an unprecedented increase in climate-aligned investments to address the negative impacts of climate shocks on growth and productivity. However, this comes at a time when these countries are experiencing slow growth prospects, declining productivity, and subdued levels of investment.

Making matters worse are the existing constraints in developing countries, such as rising debt burdens, limited fiscal space, low investment rates, and underdeveloped domestic financial systems. Private investments remain expensive, insufficient, and limited in reach, while the international tax architectures are ill-equipped to deliver the necessary resources at the required scale and speed. 

Amid these challenges, the policy brief highlights the macroeconomic dimensions of mobilizing to achieve climate and development goals urgently in developing countries. In addition to the  domestic resource mobilization efforts, it proposes a 5-pillar strategy that includes reforms of the international financial and global tax architectures:

1. Countries must improve domestic resource mobilization, promote progressive tax reforms—including personal income and wealth taxes—and enhance the effectiveness of public spending. Public spending and debt sustainability management should account for the long-term growth-enhancing impacts of climate investments.
2. At the international level, reforming the global tax architecture is vital for equity and resource mobilization. This includes global minimum taxation, carbon levies, digital taxes, measures to reduce base erosion and profit shifting by corporations, and the introduction of international mechanisms to tax the extreme wealth of individuals.
3. Access to external financing must be broadened and made more affordable. This requires recapitalizing multilateral development banks (MDBs), scaling concessional financing, deploying innovative instruments (e.g., thematic bonds, climate-linked debt), and leveraging private capital through de-risking strategies.
4. The global financial safety net must be reinforced and expanded. The IMF’s evolving climate agenda, including the Resilience and Sustainability Facility (RSF), should be complemented by deeper cooperation with regional reserve arrangements and expanded Special Drawing Rights rechanneling. IMF surveillance and policy advice should take into account the impact of climate risks and the benefits of investments in climate actions.
5. Equity and institutional reform must be at the core of international financial and tax architecture. A just transition requires substantial investment in social protection, education, and labor markets, particularly for vulnerable communities. Equally, a stronger voice and representation for developing countries in the governance of international financial institutions and global tax governance is critical to ensuring their legitimacy and realigning international rules with sustainable development goals.

The policy brief stresses that it is not only economically necessary but ethically imperative to reform the international financial and tax architecture to support climate and development goals.