As the geopolitical tensions exacerbated by the war in Ukraine prevented the World Bank and IMF Development Committee from issuing a communiqué following its gathering at the World Bank and IMF Annual Meetings, a chair’s statement served to summarise the views of the majority of its shareholders.
Ms Azucena Arbeleche, Uruguay’s Ministry of Economy and Finance and Development Committee Chair, began the statement by referring to UN General Assembly (UNGA) resolutions condemning Russia’s invasion of Ukraine and calling for an immediate end to Russian hostilities. Likely mindful that the latest UNGA vote on the Ukraine conflict showed little change from the vote at the beginning of the invasion, with 35 abstentions, including by China, India, Pakistan and Thailand, the Chair noted that the Committee reiterated, “its call for greater international cooperation and strengthened multilateralism to prevent fragmentation and safeguard global economic integration.”
Stressing the link between the spill-overs of the war on already difficult economic conditions, she detailed a litany of challenges facing the world, noting, “The lingering effects of the COVID-19 pandemic and related public health and education crises, rising debt, climate change and biodiversity loss, food insecurity, energy-access deficits, fragility, conflict and resulting migration, supply-chain and trade disruptions have steepened the slowdown in global growth, and caused reversals in poverty reduction and a rise in inequality,” adding that rising inflation and reactions to it could lead to financial stress.
The statement commended the World Bank on its response to the food insecurity, education and climate crises, and stressed that responses must be underpinned by a green, resilient, and inclusive development approach. While few can doubt the desire for such an approach, serious doubts remain about whether the Bank’s so-called Green, Resilient and Inclusive Development (GRID) approach is fit for purpose (see Observer Autumn 2022). Recognising, without explicit mention, that middle-income countries (MICs) have suffered from increased borrowing costs and continued debt concerns, the statement asked Bank management for an agenda to address these development challenges for MICs.
The Chair welcomed the approval of the “Financial Intermediary Fund (FIF) for Pandemic Prevention, Preparedness, and Response (PPR), and the $1.4 billion in contributions pledged to the fund so far,” noting that international cooperation is essential in preventing a new pandemic and “also strengthening public health systems and moving towards universal health coverage.” While the mention of universal health coverage in the statement is welcome, it fails to acknowledge that the World Bank has much to do on the area, as outlined in a Human Rights Watch blog on 10 October, which noted that the Bank’s guidance on universal social protection is still lacking. Likewise, on FIF, concerns remain, with Netherland-based civil society organisation (CSO) Wemos and Belgium-based CSO Eurodad raising red flags about private sector participation, and stressing that “the design of the FIF and its operating procedures lack transparency and clarity.” The new Fund has failed to address the recommendations made by over 30 CSOs in response to the Bank’s white paper on the subject.
The Chair’s statement dedicated a paragraph to the issue of food security and praised the World Bank for its commitment to deliver $30 billion for food security and the IMF for the establishment of a new Food Shock Window that will help “countries deal with emergency balance-of-payments pressures adversely impacting food security.” That said, it is silent about the essential issue of corporate concentration in food production and financialisation of and speculation in food markets (see Observer Summer 2022, Spring 2020). Neither does the statement focus on the need to move away from its support of large-scale industrial agriculture and to squarely focus on small-holder, environmentally sustainable production.
The Chair also dedicated considerable attention to the issue of climate, a central theme of this year’s Annual Meetings (see Dispatch Annuals 2022). The statement commends the Bank for “its record delivery of over $30 billion in climate finance in the past fiscal year, in addition to $1.9 billion in WBG-managed external resources” and “strongly” welcomed the “WBG’s pioneering work to deliver Country Climate and Development Reports (CCDRs) as diagnostic tools.” In keeping with evident pressure from the Board on management, in particular in light of calls for President Malpass’s resignation after his statement of climate change scepticism in the lead-up to the Meetings, the statement “encouraged” the Bank to continue to implement its Climate Change Action Plan. It asks the Bank, in collaboration with others, to support: “i) the development of countries’ long-term strategies for investing in climate action; ii) the preparation, screening, and structuring of reforms and projects for bankable, climate-resilient investments that mobilize private capital and foster a business environment aligned with low-carbon and resilient development; iii) increased concessional and blended finance for adaptation and mitigation; and iv) bold investment in high-quality, sustainable infrastructure that enables a just energy transition.” The statement closes its references to climate by ‘reaffirming’ the “commitment made by developed countries to the goal of mobilizing jointly $100 billion per year by 2020 and annually through 2025” to address climate change adaptation and mitigation needs.
The Chair notes the needs to address the learning crisis exacerbated by the pandemic and recognises that learning losses are particularly acute among girls. It calls on the Bank to close the data gaps in education, to safeguard investments in ‘human capital’ (see Observer Autumn 2018) and in technical and vocational training. The statement commends the successful implementation of IDA20 and welcomes “the important steps the WBG has undertaken through the IDA20 commitment to develop and implement a methodology for tracking nature-positive investments.”
In a surprisingly short paragraph dealing with the debt crises (see Dispatch Springs 2021), the Chair calls on the IMF and World Bank to work together to address “rising public and private debt vulnerabilities by providing tailored policy advice to LICS and MICS [low- and middle-income countries respectively] to strengthen fiscal policy, public investment programs, and public and private debt management frameworks. It also calls on both to work with the Paris Club to support the Common Framework, which most consider a failure (see Observer Winter 2021, Winter 2020), before stressing the “importance of joint efforts by all actors, including private creditors, to continue working to enhance debt management and transparency.” Unsurprisingly the document makes no mention of the issue of currency hierarchy or calls for an international debt resolution mechanism (Observer Autumn 2022).
In keeping with US Treasury Secretary’s statement prior to the meeting and during her statement to the Committee on 14 October (see Dispatch Annuals 2022; Observer Autumn 2022), the Chair’s statement requested that management carefully assess the G20’s Independent Review of MDB Capital Adequacy Frameworks (CAF) and to “follow up before the end of the year with a roadmap for systematically assessing and discussing each of the recommendations presented in the CAF report, including regarding their applicability to the WBG institutions.” The statement closes by stressing that the Board expects, “Management to develop an implementation plan for consideration by the shareholders in good time before the Spring Meetings 2023, and to follow up with implementation of the agreed-upon priority actions in 2023.”