Geopolitical tensions continue to stymie efforts to produce a joint position at the IMFC – the direction-setting body of the International Monetary Fund. Indeed this is the 6th occasional where this group of Central Bank directors and finance ministers have been unable to release a communiqué. Instead, the chair – Minister of Finance of Saudi Arabia Mohammed Al-Jadaan – and other members released individual statements. The chair’s statement recognised the impact of conflict but emphasised that the IMF is not the forum to resolve political issues between states. This stands in contrasts to other communiqués, such as that released by the G24, which called for a robust multilateral approach to peace, reconstruction and development, while the UN has stressed that cooperation and multilateralism are vital and encouraged.

Fiscal consolidation: a “pivot” to continue in a failed direction

The statement by the chair continued a focus on the narrative of a global economic ‘soft landing’ – a position that seems increasingly difficult to maintain after the managing director’s message of ‘belt tightening’ heard throughout Annuals. The statement did acknowledge, however, that global conflict and insecurity have consequences for global economic growth and stressed the much discussed low growth, high debt dynamics. The solution to this ongoing issue, according to the statement is a “pivot towards fiscal consolidation” – although most developing countries who are now paying more in debt servicing than towards social protection or climate responses, would argue that harsh austerity measures are in fact an ongoing policy direction of the Fund and are pro-cyclical and counter-productive. While this “pivot” is to be accompanied by efforts to protect the vulnerable and “growth-enhancing public and private investments” the statement is rather lacking on how this is to be achieved other than a reference to “structural reforms to ease binding constraints to economic activity, boost productivity, increase labor market participation, promote social cohesion, and support the climate and digital transitions.” The statement released by Argentina, in contrast, stressed the position of emerging markets and developing economies (EMDE’s) and the divergent economic fortunes of countries grappling with low growth. The Fund has also begun to express concerns with the sustainability and ‘political economy’ of reforms as expressed by the managing director in the Civil Society Townhall.

Fund reviews in the context of broader pressure for international financial architecture reform

As in the chair’s statement of April 2024, debt remained a focus of this Annuals meetings statement. The chair repeated many of the statements made earlier this year, welcoming the G20 Common Framework (CF) despite the fact that it has not only failed to bring relief to highly indebted countries but indeed has been highly criticised for worsening the high levels of interest and debt servicing being demanded by private creditors. The statement also makes reference to further work on ways to address debt vulnerabilities through the Global Sovereign Debt Roundtable and the IMF and World Bank Group’s proposal to support countries facing liquidity challenges – this is despite much criticism of the presentation of debt as a liquidity issue by the Fund rather than an ongoing structural issue that is intrinsically connected to the institution’s own policies (see Observer Spring 2024)

Other aspects of the statement welcomed the various policy and process reviews upcoming at the Fund including the Comprehensive Surveillance Review that will “set future surveillance priorities”, the Review of the General Resources Accounts Access Limits, the Review of Program Design and Conditionality, the Review of the Short-term Liquidity Line, and the comprehensive Review of the Resilience and Sustainability Trust. The statement also encouraged countries to voluntarily explore Special Drawing Rights (SDRs) rechannelling – a move that elides the power that rich countries and the Fund itself have to ensure that SDRs are made available for climate and development financing.

The statement further highlighted the Fund’s work on the Poverty Reduction and Growth Trust and the review of surcharges which decreased time-based surcharges and the quota threshold, and included a commitment to a five yearly review. This is a partial victory for civil society organisations who have called for an end to the Fund’s surcharges, and demonstrates the ongoing pressure for international financial architecture (IFA) reform, a key moment for which will be the 4th International Conference on Financing for Development (FfD4).

Finally, the statement devotes some space to quota reform, referring to the addition of a chair for Sub Saharan Africa and work on realignment for the 17th quota. The IMFC statement announced ongoing work in this area including developing by June 2025 “possible approaches as a guide for further quota realignment.” The chair also acknowledged that bilateral borrowing agreements are being put in place “in case of a delay in securing timely consent to the quota increase.” During this Annuals all eyes have been on the US elections, and the prospect that the Fund’s most significant shareholder may fail to ratify its quota by the deadline of mid-November – a major blow to full ratification of the 16th General Review of Quotas (GRQ). China, on the other hand, in its statement, stressed that full ratification of the 16th quota – which seems unlikely to be completed by mid-November – is not necessary for work to begin on realignment proposals for the 17th quota, stating: “the preparatory work for the 17th GRQ does not have to wait for the entry-into-force of the resolution on the 16th GRQ.”

In many ways the IMFC chair’s statement reflects once again the ongoing high level of uncertainty at the Fund while discussions are ongoing about the need for IFA reform in advance of FfD4, with the G20 communiqué calling for continued changes to representation and governance. Significantly while the chair’s statement repeats a call for countries not to engage in “protectionism” it does not go as far as to defend multilateralism. A review of the Bretton Woods Institutions led by Mark Malloch Brown is ongoing as part of the Bretton Woods at 80 Initiative, which the managing director describes as a project to “better understand possible futures and plan for them.” However, questions remain about how the Fund intends to be ‘fit for purpose’ in a challenging geopolitical and economic landscape.