Gold reserves could help pay for climate disaster recovery

A new study finds that selling some of the International Monetary Fund’s gold could help relieve climate-vulnerable countries’ debt.

Nearly half of the 8.2 billion people on Earth live in a country that spends more on paying off debt than on education or health care. In 2023, global public debt hit a record-setting $97 trillion, according to a United Nations report, limiting many countries’ spending on these necessities, and making it even tougher to pay the financial costs associated with a changing climate—like coping with extreme heat and recovering from powerful storms.

Of the places facing the highest burden from debt payments and from climate change, developing nations, particularly in Africa and Latin America, are among the hardest hit.

“There is a concern that many vulnerable countries who have contributed the least to climate change are disproportionately facing the impacts,” says Rishikesh Bhandary, assistant director of the Global Economic Governance Initiative (GEGI) at the Boston University Global Development Policy Center.

“To cope with those impacts, they’re having to borrow money, and before they’re able to pay it back, they get hit by another climate event.”

Bhandary and Marina Zucker-Marques, a senior academic researcher for GEGI, found a potential solution: selling gold. In particular, some of the gold that’s currently held at the International Monetary Fund (IMF), which has around 90.5 million ounces, worth about $237 billion, in total.

In a recent study, they found that selling just 4% of those assets could provide debt relief for 86 low-income and climate-vulnerable nations.

How did the IMF end up with so much gold? When it was founded in 1944, member countries paid a portion of their fees in gold and continued to do so until the 1970s. Bhandary and Zucker-Marques believe that it can be put to good use—and that now is the right time.

They’re calling for the IMF, which exists to help keep the global economy stable, to sell a portion of its gold in order to replenish the financial agency’s Catastrophe Containment and Relief Trust (CCRT). The trust is supposed to cover the debt payments of low-income nations after a natural disaster, but Bhandary and Zucker-Marques point out that the funds are too low to provide sufficient assistance.

Here, the researchers dig into the feasibility of their plan, how the IMF can support global climate solutions, and what changes they hope to see in the near future:

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