Who Pays for Climate Change?

Morocco: A Tale of Resistance

by Shady Hassan

International Monetary Fund (IMF) climate policies often place the financial burden of a global crisis on the developing nations least responsible for it. This interactive report explores how Morocco successfully challenged this injustice.

The Global Emissions Gap

The core principle of climate justice is "Common but Differentiated Responsibilities" (CBDR), which states that developed nations, with the largest historical emissions, should lead climate action. Yet, IMF policies often treat all nations the same, ignoring the vast disparity in who caused the problem. This chart reveals the profound inequity.

Source: World Bank, 2022 CO2 Emissions (metric tons per capita). Hover over bars for details.

A Clash of Ideologies

The IMF's approach to climate action is rooted in a specific economic philosophy that often clashes with the principles of equity and justice. Understanding this conflict is key to seeing why their policies can cause harm.

The IMF's Approach: "Get Prices Right"

The IMF's standard playbook is based on neoliberal economics. For climate, this means using tools like carbon taxes or removing fuel subsidies to make fossil fuels more expensive. The theory is that market forces will then push consumers and industries toward cleaner energy.

The Hidden Consequence: Regressive Impact

This "one-size-fits-all" approach is inherently regressive. It hurts the poor the most, as fuel and energy costs make up a much larger share of their income. It effectively becomes a tax on the poor to solve a problem created by the rich.

The Climate Justice Approach: CBDR

The principle of Common but Differentiated Responsibilities (CBDR) acknowledges that developed nations, who built their wealth while polluting for over a century, have a greater responsibility to fix the climate crisis and should provide financial support to developing nations for their green transition.

The Core Principle: Equity

This framework demands that the costs of climate action be distributed fairly, based on historical responsibility and capacity. It prioritizes protecting vulnerable populations and ensuring that the transition to a green economy does not deepen global inequality.

A Breach of International Law?

The IMF's policy prescriptions don't just clash with economic fairness; they challenge the foundations of international climate law. The principle of Common but Differentiated Responsibilities (CBDR) is not merely a suggestion—it is a cornerstone of the 1992 United Nations Framework Convention on Climate Change (UNFCCC), a legally significant treaty.

Undermining the UNFCCC

The UNFCCC legally obligates developed countries to take the lead in combating climate change and to provide financial resources to help developing countries meet the costs of their climate actions. By imposing loan conditions that force low-emitting nations like Morocco to raise funds for climate mitigation through regressive domestic taxes, the IMF's actions effectively subvert this legal framework. It shifts the financial burden from the historically responsible polluters to the victims of the crisis.

The Core Violation

When the IMF, a powerful international financial institution, uses its leverage to enforce policies that contradict the burden-sharing principles of a global treaty, it undermines the international legal order. It transforms a collective responsibility led by the Global North into an individual fiscal problem for the Global South to solve, effectively absolving developed nations of their legal and financial obligations under international law.

Morocco and the IMF's New Climate Fund

In 2023, Morocco became one of the first countries to access the IMF's new **Resilience and Sustainability Trust (RST)**. This fund was created to provide long-term, affordable financing to help vulnerable countries build resilience to climate change. However, Morocco's experience with the RST's lending arm—the **Resilience and Sustainability Facility (RSF)**—shows a deep contradiction between the program's stated goals and its initial policy demands.

Initial IMF Plan (RM10) - REJECTED

The IMF's first proposal under the RSF was a broad increase in the Value-Added Tax (VAT) on all fossil fuels.

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Who would pay?

The general population, including low and middle-income families, through higher prices for transport and cooking fuel.

New Plan (RM17) - ADOPTED

After the government refused, a new measure was adopted that targets the largest polluters.

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Who pays now?

Heavy industries, through increased excise duties on coal, heavy fuel oil, and other industrial inputs.

A Nuanced Victory: While this protected the public from immediate price hikes, it still forces a low-emitting developing economy to generate domestic funds to solve a climate crisis it did not create, shifting the financial burden from historical polluters.


Morocco: The High Cost of Resistance

Round 1: The IMF's Regressive Demand

Under the new RSF program, the IMF mandated Reform Measure 10 (RM10): a broad increase in the Value-Added Tax (VAT) on fossil fuels. This would have directly increased transport and cooking costs for all citizens, hitting the poor the hardest during a period of already high inflation and widespread protests over the cost of living.

The Pushback

Citing "concerns about its impact on the population," the Moroccan government refused to implement the tax hike. They recognized it was socially unjust and politically explosive to ask citizens to pay more for essentials while already struggling.

Round 2: The Cost of Defiance

The IMF retaliated. For failing to meet the RM10 conditionality on time, the Fund used its leverage and withheld a loan disbursement of SDR 62.5 million (approx. $82 million). This punitive action demonstrated the immense pressure placed on countries to accept even unjust policies.

The Pivot to a Just Policy

Forced by Morocco's resistance, the policy was renegotiated. The new Reform Measure 17 (RM17) scrapped the broad tax on the public and instead targeted heavy industry by increasing excise duties on coal and fuel oil. This placed the burden on the largest domestic polluters, not the poor. The IMF's own analysis admitted this new measure had a "comparable impact" on emissions, proving a more just alternative was possible all along.

Lessons from Morocco: A Blueprint for Climate Justice

Morocco's successful renegotiation of its IMF climate loan is not just a national victory; it's a powerful precedent for other developing nations. It proves that resistance to inequitable policies is possible and that alternative, more progressive paths exist. The key is understanding the leverage points and articulating a clear, socially-just alternative.

A Playbook for Other Nations

1. Assert National Context

Morocco refused a policy that ignored its domestic reality of high inflation and social unrest. Lesson: Prioritize citizens' well-being over the IMF's rigid, one-size-fits-all prescriptions.

2. Propose Progressive Alternatives

Instead of just saying 'no,' Morocco forced a pivot to a policy targeting industrial polluters. Lesson: Counter regressive proposals with a well-defined, equitable alternative.

3. Leverage Social Pressure

The government's resistance was fueled by widespread public protest. Lesson: Civil society and public mobilization are critical in providing the political mandate to stand up to IFIs.

4. Expose the Inequity

The Moroccan case highlights the core injustice of the IMF's approach. Lesson: Frame the debate in terms of climate justice and international law (CBDR) to challenge the legitimacy of the IMF's demands.

Ultimately, Morocco's renegotiation of the conditionalities proves that alternative, more progressive policies exist. It serves as a powerful precedent for other nations, demonstrating that the narrative of 'no alternative' to austerity is a myth. However, it also reveals a critical flaw in the current climate finance architecture: even in a successful negotiation, the IMF's Resilience and Sustainability Facility (RSF) is still effectively shifting the financial burden of climate action onto a developing nation. By standing firm, countries can reshape the terms of engagement, but true climate justice requires a fundamental reform of the system to ensure the burden falls on those historically responsible for the crisis.