As disagreements over the Middle East and Ukraine once again prevented the Development Committee from issuing a communiqué following its gathering at the 2024 Spring Meetings, a chair’s statement summarised the majority of shareholders’ views.
Mohamed bin Hadi Al Hussaini, finance minister of the United Arab Emirates and Development Committee Chair, stressed that, amidst developing economies facing heavy debt burdens and constrained fiscal space, “Immediate action is needed to address these multiple intertwined crises if the world is to eradicate poverty and reduce the inequality affecting many clients, including those in small states, while addressing the root causes of Fragility, Conflict and Violence (FCV).” Disappointingly, not defining the ‘root causes’ of FCV failed to offer a clear direction of travel. As it stands, the Bank’s strategy for FCV-ridden states operates in a political-economic vacuum, disconnected from the drivers of FCV worldwide – not least through the Bretton Woods Institutions (BWIs) support for the privatisation of social services that erode the social contract (see Observer Winter 2023).
As the Bank moves from Evolution Roadmap to Playbook, advancing towards becoming a ‘better and bigger Bank’, its gears are shifting from vision to speed and impact. Members welcomed these steps, including the WBG Scorecard and Knowledge Compact, the Global Challenge Programs, the Private Sector Investment Lab, and the expanded Crisis Preparedness and Response Toolkit. Yet, members emphasised that, “We must hold ourselves accountable more broadly as we become a better and bigger bank” – calling for enhanced partnerships between the Bank and global and regional actors and accelerated country engagement reforms to assist clients in domestic resource mobilisation (DRM).
While this is appreciated, it tiptoes around broader accountability required for a ‘better’ Bank. Civil society has urged an independent evaluation of the Bank’s lending practices and policy approaches, including its role in fiscal consolidation and constrained counter-cyclical state intervention. Doubling down on the Cascade approach, through the Private Sector Investment Lab, disregards evidence of the Bank’s failure to deliver promised development finance and its negative social impacts (see Observer Summer 2023), making it crucial for the WBG Scorecards to include human rights indicators (see Dispatch Annuals 2023).
Addressing the debt crisis: Is relief on the horizon?
The chair’s statement recognised debt sustainability as an important issue, with members calling for closer collaboration between the Bank and Fund, welcoming the review of the Low-Income Countries Debt Sustainability Framework. They also called for enhanced cooperation to support the implementation of the Common Framework for eligible countries by the Paris Club and other G20 creditors, emphasising the need to strengthen creditor coordination for debt restructuring processes. This call coincided with the grim economic forecast from the World Economic Outlook, underscoring the urgency to address debt (see Dispatch Springs 2024).
This echoes a previous call made by the chair of the Development Committee during the Annual Meetings in October 2023 (see Dispatch Annuals 2023) – although still missing from the Bank’s discussion paper “From Vision to Impact”. This slow progress is costing lives: Urgent action is needed to evaluate the Bank’s role in debt sustainability, integrating human rights and environmental considerations into its analyses (see Observer Autumn 2023). Countries in the Global South are averaging 38 per cent of their government revenue on debt servicing, rising to 54 per cent in Africa. And there is little hope for relief: The G20 Common Framework – failing to hold private creditors accountable – is ineffective (see Observer Winter 2023). Civil society and V20 finance ministers have been vocal about the need for debt solutions to achieve development and climate goals (see Dispatch Springs 2024).
Doubling down on a private sector led approach: At what point will urgent, compounding crises pave the way for reform?
Members are committed to a successful 21st replenishment of the International Development Association (IDA), the Bank’s low-income arm, happening this year – calling for “steadfast efforts from existing and new donors, client countries, and the Bank to increase development impact”. While a historic a replenishment would be welcome, civil society has called for it to be accompanied by a clear policy framework for IDA21 – to drive green socio-economic transformations in the Global South, decreasing commodity dependence and increasing economic diversification. Currently, the emphasis on private-sector finance, via IDA’s Private Sector Window, redirects limited concessional finance by prioritising market development over human development and economic transformation (see Observer Spring 2024).
Members look “forward to the new WBG Gender Strategy, and its implementation, to strengthen work to end gender-based violence, elevate human capital, expand economic opportunities, and engage women as leaders.” Yet, this failed to address the delay in implementing the Strategy, leaving civil society anxious about watering-down of crucial issues like gender and disability inclusion into ‘lenses’ lacking policy commitments – exacerbated by the exclusion of gender as an IDA21 ‘special theme’ (see Dispatch Springs 2024). The continued emphasis on women’s workforce participation, seen in the new WBG Scorecards, perpetuates systemic problems underlying gender inequality (see Observer Autumn 2023).
The statement welcomed the WBG’s COP28 comittment, “devoting 45 percent of its annual financing to climate by the end of FY25, balancing the priorities of adaptation and mitigation”. However, CSOs have raised concerns about the transparency of the Bank’s climate finance accounting, as well as its continued promotion of private capital mobilisation to tackle the climate crisis – highlighting the structural hurdles faced by institutional investors holding assets from low- and middle-income countries. This strategy requires substantial public subsidies to ensure predictable returns, especially in Global South economies where the cost of capital is at an all-time high – exacerbating profit extraction from Global South to North (see Report, Gambling with the planet’s future?).
As Fernando Haddad, minister of finance for Brazil, argued in his statement: To address head on 21st century challenges, the BWIs urgently need to adapt “to the intricate tapestry of social, political, and economic challenges we face today.”
