New Independent Evaluation Office report calls for stronger integration of climate into IMF surveillance and lending
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Article summary
- Recommendations of IEO evaluation of Fund’s climate work expected to feed into IMF’s ongoing conditionality and surveillance reviews.
- IEO findings echo civil society concerns that climate is unevenly integrated into IMF surveillance and lending.
In June, the IMF’s Independent Evaluation Office (IEO) published its first evaluation of the Fund’s climate work since the launch of the Fund’s first dedicated Climate Strategy in 2021 (see Observer Autumn 2021).
The findings come at a politically sensitive moment, with the current US administration – the IMF’s largest shareholder – increasingly hostile to climate action (see Observer Autumn 2025). The IMF Executive Board nonetheless signalled broad support for the Fund’s climate work, noting that while “a few Directors” questioned whether it had crowded out the core mandate, “most Directors stressed the need for sustained institutional support to preserve the progress achieved with the new approach.”
The IEO’s recommendations are expected to feed into the Comprehensive Surveillance Review (CSR; see Observer Summer 2025) and the Review of Conditionality (RoC; see Observer Autumn 2025), both due this year.
In an 8 June press release, international civil society organisation (CSO) Recourse welcomed the findings but argued the IEO’s recommendations did not go far enough.
Recourse’s Federico Sibaja said, “The report recommendations do not seem to live up to the findings of the contradictions between austerity and climate policy, fossil fuel expansion under IMF programmes and the lack of alignment with the Paris Agreement.” He added, “We now have the responsibility to take these findings into the CSR, RoC and the Management Implementation Plan that should go to the Board before the end of the year.”
Climate remains “aspirational” in surveillance
On surveillance, the IEO found Article IV reports do not systematically estimate climate financing needs or incorporate them into Debt Sustainability Analyses (DSAs), treating them as “aspirational”, and called for more explicit assessment of climate macro-criticality.
This reflects a contradiction in IMF policy advice: DSAs embed fiscal consolidation measures to ensure debt repayment (see Observer Autumn 2022), thereby constraining fiscal space for climate action and potentially reinforcing dependence on fossil fuels. The IEO found evidence that some IMF-supported programmes are reliant on fossil fuel extraction, including in Argentina.
This is a broader weakness of the IMF’s surveillance work that was also identified in the IEO’s fiscal policy evaluation in December 2025 (see Observer Spring 2026), which found that climate, inequality and other issues the Fund deems “macro critical” are not consistently integrated into fiscal and debt frameworks (see Briefing, Brace for impact: Social and gender inequalities in IMF surveillance), with surveillance in emerging markets remaining anchored in fiscal consolidation (see Observer Winter 2023).
Aligning non-RSF lending with Paris Agreement
On lending, the IEO recommended strengthening the Resilience and Sustainability Facility (RSF; see Inside the Institutions, What is the IMF Resilience and Sustainable Trust?) and clarifying how climate is integrated within lending, noting “limited and uneven integration” outside the RSF.
Civil society groups and some developing countries have criticised the requirement that RSF financing is conditioned on having a separate IMF programme, arguing that this can tie climate action to fiscal consolidation measures. While the IEO found that this requirement is one of the RSF’s “most contested features,” it stopped short of recommending any changes.
More broadly, CSOs have been calling for all IMF lending to be aligned with the Paris Agreement, including in recommendations to the RoC and CSR reviews. Yet the IEO noted that the Fund is not planning to do so, citing “operational flexibility” and consistency with its Articles of Agreement. Sibaja argues that “while the chapeau report claims the Article of Agreements blocks any chance of full alignment with Paris, there is no real legal analysis to support this claim.”
IMF Managing Director Kristalina Georgieva responded to the IEO’s findings, saying she “broadly support[s] the report’s key recommendations”, but stressed that climate “should be incorporated only when instrumental to program success.”
