An uneven and uncertain path to recovery
The communiqué began by noting the uncertain nature of the Covid-19 pandemic and the uneven global recovery from it. The Development Committee stressed that, “Low-income countries (LICs) and middle-income countries (MICs) continue to see high COVID-19 caseloads, risks of new variants, vaccine supply bottlenecks, and obstacles to vaccination”, with LICs and MICs “falling further behind.” The Committee further warned that “volatile commodity prices, supply chain disruptions, inflationary pressures, and constraints on fiscal space have further complicated policy options.” Seemingly acknowledging complaints from MICs that international efforts have not been adequately designed to meet their needs, the Committee asked the World Bank to, “assess its support to MICs, which have been hit hard by the pandemic”. The communiqué also noted its commitment to “concluding an ambitious IDA20 replenishment in December”, as countries reliant on financing from the International Development Association (IDA), the Bank’s low-income arm, “will face exceptionally high financing needs during the next IDA cycle.”
Reviewing the impact of the pandemic to date, the communiqué listed a number of harrowing trends, including that “an estimated 100 million more people have fallen into extreme poverty, about 80% of them in MICs. Millions of jobs have been lost, while informality, underemployment, and food insecurity have increased…Women’s economic and social situation has worsened…The pandemic has also heightened vulnerabilities in LICs, MICs, and in situations of fragility, conflict, and violence (FCV).”
Silence on TRIPs waiver endures
The communiqué acknowledged that “vaccines are critical to saving lives and restarting economies”, accepted that, “challenges remain in ensuring timely and equitable access [to vaccines]” and encouraged “the WBG, IMF, WHO, and WTO task force to leverage global partnerships; scale up production; rapidly disburse financing to facilitate deployment and delivery of COVID-19 vaccines; and finance critical testing, diagnostics, and treatment.” Despite the document’s justified focus on the need to massively expand vaccination rates, particularly in MICs and LICs, where only 2.7 per cent of the population has had at least one shot, it fails to back the intellectual property rights waiver at the World Trade Organization. This waiver has been demanded by over 100 of the World Bank’s shareholders (see Observer Spring 2021), the People’s Vaccine alliance, and considered essential by intellectual property and health experts for effective and equitable global vaccination efforts.
The Committee devoted significant attention outlining what it considers the World Bank’s capabilities to help countries to develop “stronger policies, mechanisms, institutions, and resources to bolster resilience.” It called on the Bank to “continue providing flexible, rapid financing for the most vulnerable, including in small states and FCV situations.” Of concern to civil society organisations and others who have critically analysed the World Bank’s support for the privatisation (see Dispatch Annuals 2021, Springs 2021) and financialisation of health care (see Observer Winter 2020) the Committee also called on the Bank to “continue exploring innovative solutions that can mobilize private financing to developing countries.”
Long live the enabling business environment
Sidestepping the critics of the Bank’s recovery response to date, the communiqué stressed the need to continue supporting a green, inclusive and resilient recovery (see Dispatch Springs 2021) “in line with longer-term objectives for sustainable development”. The document underscored that LICs, MICs and small states face various vulnerabilities, given that, “Climate change, biodiversity loss, and environmental degradation have compounded the pandemic’s effects on poverty reduction, inequality, human capital, migration, gender equality, FCV, and food security.”
While the communiqué encouraged the Bank and other international financial institutions to advise states on essential reforms to “enhance equitable domestic resource mobilization…combat illicit financial flows…and work to strengthen institutions”, it used the same sentence to signal support for ‘essential reforms’ that enhance “the quality of public spending and foster an enabling environment for private and public investments”. While the Bank took a high-profile decision to discontinue its much-criticised Doing Business Report (see Observer Autumn 2021), in the lead up to the Annual Meetings, it is evident from the language above that the report’s underlying market-based solutions remain a priority at the Bank.
Climate change and the Wall Street Consensus
The communiqué welcomed the Bank’s new Climate Change Action Plan, “including results measurement and reporting, as well as strong support for Nationally Determined Contributions (NDCs) and National Biodiversity Strategies and Action Plans” (see Observer Summer 2021) and asked the Bank to roll out its new Country Climate and Development Reports in client countries. Expressing some frustration on progress to date on alignment with Paris, the Committee stressed that it expects, “the WBG in cooperation with other MDBs, to play a leading role in aligning with the Paris Agreement, with specific timelines, deliverables and financing mechanisms.”
The Committee expressed support for what Professor Daniela Gabor calls the Wall Street Consensus, urging the World Bank “to increase its impact even further by mobilizing more climate finance from the private sector and domestic resources,” in sentiments that were widely shared by policymakers and indeed institutional investors at the Annual Meetings (see Dispatch Annuals 2021[JS1] ).
Debt and SDRs: Nothing new under the sun
Given record and unsustainable debt levels and the unwillingness of private finance to participate in debt cancellation and restructuring, as noted by World Bank President Malpass himself during the Annual Meetings, the communiqué’s emphasis on debt transparency was telling. The Committee’s emphasis on debt transparency reflects the Bank’s shareholding dynamics, where the US and European states continue to focus on the issue as part of an effort to ensure resources released through debt suspension or restructure are not used to pay Chinese loans. Equally concerning was the Committee’s sparse words about the end of the Debt Service Suspension Initiative in 2021 and G20’s much-criticised Common Framework, which UK-based civil society organisation, Jubilee Debt Campaign warned has “suspended less than a quarter of debt payments, and the debt restructuring scheme has restructured no debt” (see also Observer Winter 2020).
The Committee had also relatively little new to say about the IMF’s new $650 billion allocation of Special Drawing Rights (SDRs), limiting itself to “ask[ing] the IMF and the WBG to collaborate, within their mandates and comparative advantage, to help countries make the best use of their SDRs, support and coordinate voluntary SDR channeling efforts, and magnify the benefits for vulnerable countries.” The document was silent on important debates about the use of policy conditionality in instruments used to rechannel SDRs, and whether States should be encouraged to make fiscal use of them to support the recovery – rather than, as has been strongly suggested by the Fund, to maintain them as reserve assets (see Dispatch Annuals 2021; Observer Autumn 2021).
Doing Business Report: Yes, under the carpet, a lovely spot….
Making no reference to the Doing Business Report data manipulation scandal (see Observer Autumn 2021) and preferring not to acknowledge the statement signed by over 130 civil society organisations and academics calling for radical governance reforms at the Bank and an end to the gentleman’s agreement, the Committee merely noted that it “strongly support[s] the WBG’s commitment to the highest levels of transparency and accountability in its operations and research” and called for “stronger whistleblower protection and a zero-tolerance policy for abuse and misconduct.”
Apropos of governance issues, the communiqué thanked the “WBG Executive Directors for their work on the Reviews of IDA Voting Rights and of IBRD and IFC Shareholding” and “welcome[d] the consensus around the final report on the IDA Voting Rights review” and the recommendation that the former be implemented in upcoming IDA20 replenishment.
The Committee also accepted the recommendations of the 2020 Shareholding Review and noted that the next five-yearly Shareholding Review will take place in 2025.