The communiqué of the Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development (G24) for the 2023 International Monetary Fund (IMF) and World Bank Annual Meetings was released on 10 October. Within the context of yet another violent conflict and large-scale sufferings, the group called for development partners to ensure “no one [is] left behind” whilst prioritising peace, stability and livelihoods in responding to the “human suffering experienced from various crises globally.” The group also prefaced recommendations by acknowledging the continually strained global economic circumstances, noting that benefits of recent declining inflation due to rising interest rates were offset by negative tightening financing conditions.
For an Annual Meetings that felt especially deflating, reflecting a still bleak global outlook, but lacking commitments to change, (see Dispatch Annuals 2023) the G24’s recommendations were a source of comparative optimism. Answering hopes for focus on economic reform (see Dispatch Autumn 2023), it was significant to see the G24 supporting several civil society-backed calls including quota reform, surcharges suspension and a new SDR allocation, and escalating or maintaining many issues raised in the Spring 2023 G24 communiqué with the urgency undoubtedly needed as record numbers of countries spiral into economic distress. The mood shift is palpable: Less time spent calling for multilateralism, as the group did in recent meetings, and more focus on stepping up to support much needed financing solutions as the global economic outlook becomes more depressed. Given the exacerbation of crises across the globe, waning focus on the importance of multilateralism risks leading to further geopolitical fragmentation, especially given the recent expansion of BRICS. One area of global coordination that was stressed was to focus on “coordination by official, bilateral and private creditors is needed to address the deteriorating debt situation and facilitate coordinated debt treatment for debt distressed LICs and MICs”.
Focus on ‘last resort’ support for struggling countries
Focusing much of its attention on the IMF’s role as a lender of last resort, the group welcomed the current discussion on IMF’s charges and, reiterating its position during Spring Meetings, amplified calls for a revision of the Fund’s surcharges policy, widely deemed regressive and pro-cyclical (see Dispatch Springs 2023; Inside the Institutions What are IMF surcharges?). It went further to call for the “suspension of surcharges while the review—which we hope will lead to substantial permanent reduction or complete elimination—is being conducted.”
Elsewhere, the group called for a new Special Drawing Rights (SDR) allocation, highlighting it as another tool to support struggling client countries, and for countries to volunteer for rechannelling opportunities, and indeed meet their current commitments. The paper noted that additional SDRs could mitigate balance of payments and fiscal crises, while reducing borrowing costs for low low- and middle-income countries (LMICs). The group also highlighted the importance of SDRs in addressing the debt crises, including by lowering countries’ borrowing cost. The support for civil society calls for a new SDR allocation is a welcome reiteration of a recommendation in the Springs 2023 communiqué (see Briefing, Reconceptualising Special Drawing Rights as a tool for development finance).
Calls to further reduce barriers to Fund financing
In addition to the call for a new SDR allocation, the group went further in its call for a reduction of barriers to financing for struggling countries by recommending a reassessment of the requirement of prior Upper Credit Tranche facility for long term Resilience and Sustainability Trust (RST), and Poverty Reduction and Growth Trust (PRGT) programmes, amidst an already long list of barriers such as underfunding, preconditions, long application and disbursement processes, or high unsustainable debt burdens of prospective applicants.
The group also addressed issues around the IMF’s 16th General Review of Quota (GRQ), cautioning that failure to address quota realignment would set a worrying precedent. The group also called for action on the often-discussed establishment of a third chair for Sub-Saharan Africa on the IMF executive board to “enhance the voice and improve the representation of the region.” The group reaffirmed its commitment to a quota-based IMF and reiterated concerns about the limited progress on the GRQ. It expressed dissatisfaction with the possibility of only equi-proportional increase of quotas at the 16th GRQ without realignment, warning that it would “be a very bad precedent that sends a clear but negative signal to the international community about IMF’s commitment to multilateralism and governance reform.”
World Bank Roadmap out of vogue
A lesser focus on the World Bank and its much-debated Evolution Roadmap (see Briefing, Civil Society calls for rethink of World Bank’s ‘evolution roadmap’ as part of wider reforms to highly unequal global financial architecture) is clearly seen in the communiqué. In comparison to the enthusiasm at the Spring Meetings, even mention of the Evolution Roadmap by name was absent, reflecting confusion in Marrakech over the status of the Roadmap and what change it actually proposed. Given Banga’s admission in the Autumn 2023 Townhall that he dislikes buzzwords, and the vanishing of reference to the ‘Cascade’ approach in a report prepared for the Development Committee ahead of the meetings, it likely left the G24 unable to comment on much beyond the lack of concrete outcomes in Marrakech. The group noted “We look forward to the presentation of a more comprehensive strategy and implementation plan beyond Marrakech”, a sentiment likely shared by many as the Bank failed to step up to calls for serious transformation this Autumn (see Dispatch Annuals 2023).
On Bank financing, the group deemed it ‘crucial’ to reiterate the importance of offering affordable financial terms, including grant and concessional terms, for IDA21 and IBRD instruments, as this will “facilitate the achievement of sustainable development.” On climate, the group called for “stepping up climate finance to support loss and damage, adaptation and just transition.” With the next IDA replenishment set for early 2024, and shareholders due to be asked to pledge by December 2024, eyes will be on the reluctant Global North states to step up and address the widening development financing gap.