The 2024 Annual Meetings of the World Bank and IMF, taking place from 21-26 October in Washington DC, occur at a pivotal moment in the future of both institutions, with discussions centring on the results of attempted reform at the World Bank, and the extension of the IMF’s mandate into ‘emerging areas’, notably climate and gender. On their 80th anniversary, the Bretton Woods Institutions (BWIs), i.e. the IMF and World Bank, face persistent calls from civil society organisations (CSOs), the UN and the Group of 77 for a transformation of the international financial architecture (IFA) in which they play a crucial role, amid ongoing instability and threats to the multilateral order.
The case for reform is both long-standing and ongoing, as evidenced by the 50-year anniversary of the New International Economic Order (NIEO), Global South alliances such as the expanded BRICS, the G20’s focus on national development priorities, and calls for MDB local currency reform. The interventions of Global North countries in ongoing conflicts such as those in Ukraine and the Middle East, have added to accusations of hypocrisy in the context of perceived lack of action on IFA reform by major shareholders at the BWIs. At the same time, the need to address the erosion of trust in these institutions, and in multilateralism more broadly, is increasing, although the timeline for change is very much dependent on the results of the November elections in the US (see Observer Autumn 2024).
The past year has seen an upsurge of protest and political instability as a direct response to the impact of IMF-demanded reforms, particularly in Kenya, Nigeria, Argentina, Sri Lanka and Bangladesh (see Observer Autumn 2024). The sustainability of these economic reforms was recently questioned in the IMF Independent Evaluation Office’s (IEO) evaluation on the Fund’s fiscal policy advice, which found that staff paid “insufficient attention to political economy considerations.” The World Bank’s Evolution Roadmap, on the other hand, has been criticised by CSOs since its inception for its strong focus on private finance and deregulation, with the Bank mainly responding by removing all explicit mentions of the private finance-led ‘Cascade approach’ (see Observer Summer 2017) from the final version of the Roadmap, despite its policy approach largely remaining the same (see Dispatch Annuals 2023).
The nature of IFA reform has also been the subject of debate in the run up to the Fourth Financing for Development (FfD) Conference in Seville, Spain, in mid-2025, which presents a key opportunity for civil society to call for much needed systemic change. This was emphasised in the FfD CSO Mechanism’s critique of the outcome document of the September UN Summit for the Future, i.e. the Pact for the Future, which stated that the reform of international financial institutions – most notably the IMF and the World Bank – must be carried out via an independent review process in the UN rather than within the institutions.
Forty years of pro-cyclical austerity policies lie at the root of the unsustainable debt levels that currently engulf countries in the Global South – with many countries spending more on debt-servicing than social spending or climate action. Calls for a debt jubilee or cancellation are likely to take centre stage at the Civil Society Policy Forum events held this year, as 2024 marks the start of a review of the Bank and Fund’s Low-Income-Countries Debt Sustainability Framework. CSOs and the UN have called for a human rights framework to be incorporated within Debt Sustainability Assessments, and highlighted the centrality of resolving the debt crisis to making progress on climate action (see Inside the Institutions, What is the World Bank & IMF debt sustainability framework for low-income countries?).
World Bank’s ‘evolution’ process looks more like a maladaptation than a reform yielding a ‘bigger, better Bank’
After one year of implementation, cracks are beginning to show in the Bank’s internally-led Evolution Roadmap reform agenda, giving further credence to civil society’s call for an external evaluation of why the Bank’s policy approach – from structural adjustment to the present – has so frequently failed to lead to economic transformation in its borrowing countries (see Observer Autumn 2024).
The incoherent nature of the Bank’s approach has been on show in the 21st replenishment process for the International Development Association (IDA21), the Bank’s low-income lending arm, where efforts to piece together disparate elements of the Bank’s half-baked reform agenda have led to a draft policy package that is dramatically weaker than the IDA20 version. According to draft documents released on 15 October, the IDA21 policy package includes a significant reduction in country-specific gender policy commitments, despite the launch of the Bank’s new gender strategy earlier this year (see Observer Autumn 2024), and the continuation of the Bank’s private finance-led development approach in key areas such as energy, water and agriculture – even though efforts to ‘crowd in’ private finance have fallen particularly flat in IDA member countries.
The IDA21 replenishment has become a testing ground for the Evolution Roadmap reforms, including a revamped Corporate Scorecard. Despite having two indicators designed to measure how much private finance the Bank is ‘crowding in’, the new Scorecard lacks a clear indicator to gauge the Bank’s impact on economic transformation, and is only belatedly piloting an indicator on citizen engagement after missing this out completely in its first iteration (see Observer Summer 2024). Civil society is also still awaiting full details on the Bank’s new Global Challenge Programs, with little information about these initiatives in the public domain, more than a year after they were announced prior to the 2023 Annual Meetings. Likewise, the innovations from the Bank’s new Private Sector Investment Lab remain unclear, with CSOs raising concerns it will give Wall Street CEOs (even) greater voice inside the institution. Civil society remains highly sceptical about whether these reforms amount to an ‘evolved’ institution.
Drastically scaling up funding within the wider multilateral development banks (MDBs) system – a key priority of the Roadmap reforms – is also in serious doubt. Despite World Bank President Ajay Banga confidently calling for the largest IDA replenishment ever in December, and African heads of state backing a $120 billion IDA21 replenishment earlier this year, achieving even a nominal increase compared to IDA20’s $93 billion replenishment is proving difficult in the context of increasingly insular Western donors slashing aid budgets (see Observer Autumn 2024). Meanwhile, a capital increase for the International Bank for Reconstruction and Development (IBRD), the Bank’s middle-income arm – historically the most effective way of increasing the Bank’s lending firepower – appears to be a remote possibility at present, given the increasingly antagonistic stance towards the BWIs from US conservatives, who have repeatedly blocked funding requests from the current US administration (see Observer Autumn 2024). The upshot is that the Bank may provide financing at steeper rates going forward, even as calls for debt forgiveness, including from the MDBs, grow to a crescendo during the Catholic Church’s Jubilee year in 2025.
Questions raised over IMF’s work in emerging areas such as gender and climate, as CSOs point to lack of consultation on key policy reviews
CSO engagement on a number of recent, influential IMF policy reviews has been hampered by a lack of transparency around timelines and consultation processes, as highlighted in a letter signed by over 70 CSOs calling for a review of the effectiveness of the IMF’s 2015 Guidelines on CSO engagement and for a clear policy to “set systematic and mandatory rules for civil society engagement, including at country level.” The need for reform also continues to dominate CSO discussions on the Fund, as countries begin to ratify the IMF’s 16th General Review of Quotas, which failed to engender a more equitable distribution of IMF vote shares (see Briefing, A way out for IMF reform).
The IMF has traditionally distanced itself from development goals, yet increasingly asserts itself on issues such as climate, gender and inequality. However, the efficacy of the Fund’s enlarged mandate is under scrutiny by, among others, the IEO whose evaluation of the Fund’s evolving mandate published in June noted that the implementation of work in such new areas has been hampered by “limited resources and expertise”. The IEO’s draft issues paper for a new evaluation on the IMF’s climate work published in September, indicated it will focus on the “initial implementation of the 2021 Climate Strategy, the Fund’s climate-related bilateral and multilateral surveillance, and the design of the RST [Resilience and Sustainability Trust] and [its] early implementation.” Given the incoherence between IMF loan programmes and the first tranche of RST lending programmes, CSOs will have plenty to critique in the Fund’s approach, which has largely failed to address the macro-criticality of the low-carbon transition in its surveillance and other activities, despite this being highlighted as a key issue in its 2021 climate strategy (see Observer Autumn 2021). While the IMF struggles to mainstream climate action – which will require new ‘green’ spending – into a mandate still largely predicated on austerity, the 70 heads of state who are part of the Climate Vulnerable Forum in late September called for ‘Climate Special Drawing Rights (SDRs)’: a new $650 billion allocation of SDRs by the Fund to help address the climate emergency, as well as pursuing future SDR allocations that are “predictable and needs-based.”
On gender, the Fund’s commitment to ‘mainstream gender across all of its operations’ in its 2022 Gender Strategy, has entered its second phase with the release of the Interim Guidance Note on Mainstreaming Gender in January and the development of gender ‘toolkits’. Whilst some of these toolkits – which are yet to be published – appear to interrogate the gendered impacts of the Fund’s policy advice, others delve into an analysis of a country’s gender ‘gaps’ in areas outside their expertise. CSOs are calling for an end to what the IEO describes as a “piecemeal” and “ad hoc” approach, and for the adoption of mandatory ex ante and post hoc distributional and gender impact assessments as a systemic way for the Fund to address the harmful impacts of its policy advice (see Observer Summer 2024).
The release of the surcharges review in October (see Observer Summer 2024) has demonstrated a certain level of awareness at the Fund that reduced borrowing costs are crucial for countries trapped in a cycle of debt, yet despite this the Fund has not seen fit to eliminate surcharges completely. In addition, the Fund’s Poverty Reduction and Growth Trust (PRGT) review is of great concern to CSOs as a form of concessional lending at zero per cent interest to low-income countries (LICs). There are suggestions that the Fund is discussing a two-tiered interest rate system based on their analysis of LICs’ heterogeneity, which will entail the poorest countries retaining zero per cent interest rate lending, but will see other countries’ interest rates increase.
The consultation launched by the Fund and Bank on BWIs at 80 Initiative in July stands, at present, in stark contrast to missed opportunities for reform, and lost momentum. If the Fund and the Bank are to be made ‘fit for purpose’ in an increasingly unstable global context, then, as argued in a new report by the Taskforce on IMF, Climate and Development, transformative action is required to address pressing issues. Central among them is a shift from policy advice and conditionality promoting fiscal consolidation, to providing countries with the fiscal space needed to achieve climate and development goals.
