After weeks of speculation about the US’s position regarding the World Bank and IMF – following a US executive order in early February tasking US authorities to review the country’s membership in all ‘international intergovernmental institutions’ (see Dispatch Springs 2025; Observer Autumn 2024) – US Treasury Secretary Scott Bessent punctured the silence from the new US administration on 23 April in a speech at the Institute of International Finance on the side-lines of the World Bank and IMF Spring Meetings, that set out US Treasury’s updated views on the institutions.
Bessent attempted to reassure a global audience that – despite unilaterally sparking a near meltdown of the global trading system earlier in the month – the Bank and Fund’s largest shareholder stands ready to ‘lead’ on the global stage. “America First does not mean America alone,” asserted Bessent. “Far from stepping back, America First seeks to expand U.S. leadership in international institutions like the IMF and World Bank…[and] restore fairness to the international economic system.”
He went on to claim, “The Bretton Woods institutions [BWIs, i.e. the Bank and Fund] must step back from their sprawling and unfocused agendas,” singling out their work on climate, gender and other social issues – and claiming they need serious reform.
About 3.3 billion people – almost half of humanity – now live in countries that spend more money paying interest on their debts than on education or healthUNCTAD
Of course, the Bank and Fund have long been criticised by civil society, including for the economic, social and environmental impacts of their investments and policy prescriptions – from structural adjustment to the Billions to Trillions agenda (see Observer Summer 2023), but Bessent’s complaints share little DNA with these critiques.
There was general relief among many shareholders that the US administration did not signal an immediate withdrawal from the BWIs, after exiting the World Health Organisation, the Paris Agreement and (inter alia) slashing development and climate finance commitments, in its first 100 days in office. But in a world characterised by growing multipolarity, the “America First” agenda is accelerating the fragmentation of a global multilateral order that remains deeply unequal – making reforms towards a more just international financial architecture more urgent, including at the upcoming UN Fourth Financing for Development (FfD4) Conference in Seville, Spain (see Observer Spring 2025).
Indeed, the impacts of US tariffs are already hitting many low- and middle-income countries (LMICs) hard. The IMF’s April update to its World Economic Outlook (WEO) attempted to chart the impact of the US tariffs launched earlier in April, slashing global growth forecasts for 2025 by a half point to 2.8 per cent compared to the January WEO update, with uncertainty levels higher than during the Covid-19 crisis. Together with massive cuts to overseas development assistance – which is expected to reduce significantly this year – many country delegations arrived in DC on the cusp of potential domestic crises.
Bank and Fund leadership caves to US pressure, self-censoring references to climate and gender
Even before Bessent’s speech, Bank and Fund leadership proved eager to bend over backwards to curry favour with the new administration. This was most notable in their self-censorship on issues that might trigger its ire, especially climate change, gender and inequality. The official Spring Meetings schedule dutifully avoided these issues, focusing instead on jobs and prosperity – despite the World Bank’s newly launched Corporate Scorecard lacking an indicator that tracks how many jobs the Bank’s investments create, or indeed whether they align with Decent Work standards.
Whispers inside the corridors indicated that staff had been instructed not to speak publicly about the BWIs’ climate or gender work (‘don’t mention the approaching comet!’), despite increasing workstreams on both issues in recent years. This awkward dance continued in IMF Managing Director Kristalina Georgieva’s press briefing on 24 April, when she claimed, in response to Bessent’s speech, that the IMF has no climate experts – which will come as news to staff who have been brought onboard since the launch to the Fund’s 2021 climate strategy (see Observer Autumn 2021). The idea that climate was not core to the work of global institutions was skewered by Nobel Prize-winning economist Joseph Stiglitz at a Jubilee Debt Commission event on 23 April at the UN Foundation, where he opined, “The major challenge facing the world today is climate change – the institutions have to deal with it….In the case of the World Bank, if you’re not making climate investments, your debt won’t be sustainable.” The Vulnerable 20 Group, a bloc of 74 climate-vulnerable low- and middle-income countries gave a similar assessment in their communiqué, noting, “the world risks crossing critical geophysical climate thresholds including the 1.5°C temperature limit,…even as climate-vulnerable economies have already lost 20% of potential GDP growth over the past two decades due to climate change” (see Dispatch Springs 2025). In a further nod to the fact that other shareholders do not necessarily share the US’s views, the climate commitments for 21st replenishment of the International Development Association, the Bank’s low-income country arm, were retained in a policy package approved by World Bank governors before the Spring Meetings.
Meanwhile, World Bank President Ajay Banga has instigated a process to review the Bank’s energy strategy, including its long-held prohibition of nuclear energy financing and the role of gas in its lending. While the executive board is yet to begin discussions on this, the Development Committee paper discussed by governors at the Spring Meetings attempted to put the cart before the horse, stating regarding the Bank’s flagship energy access initiative in Sub-Saharan Africa, Mission 300, “We put affordable [energy] access first….In many places, renewables (solar, wind, hydro, geothermal, and potential storage) now offer both the accessibility and affordability needed to drive opportunity. In others, gas may offer the best option, while nuclear could help power our future.” On Mission 300, Bessent claimed that, “The World Bank must be tech neutral ….In most cases, this means investing in gas and other fossil fuel-based energy production” – apparently unaware of reams of evidence, including that produced by the Bank itself, that gas is a relatively expensive way to try to reach ‘last mile’ communities in Sub-Saharan Africa who still lack energy access. The complete disregard for African communities’ views in this ‘debate’ was emphasised by African civil society in a Civil Society Policy Forum event on Mission 300 on 25 April.
Debt crisis deepens as IMF austerity remains repeat prescription
With external sovereign debt service payments growing to the highest levels in three decades, the IMF continues to misdiagnose the situation as a liquidity crisis, suggesting that initiatives within the G20 Common Framework – hailed by the IMF as improving – are sufficient. This misjudgement has serious consequences: according to UNCTAD, “about 3.3 billion people – almost half of humanity – now live in countries that spend more money paying interest on their debts than on education or health”, highlighting not only the increase in debt stock but in the cost of capital.
Although the IMF’s WEO recognised that economic pressures from US tariffs will push global public debt above pandemic-era levels, reaching 117 per cent of global GDP by 2027, austerity remains its primary policy prescription. In practice, austerity simply allows borrowing countries to make cuts to service debt and avoid default – often under threat of losing access to financial markets – while leaving vulnerable groups, including women and marginalised communities, to absorb the shocks. The controversy surrounding the IMF’s role in Argentina underscores these tensions: Fund leadership has publicly praised Argentina’s new $20-billion loan as a model for Fund-induced reforms, with officials openly championing austerity. Moreover, Georgieva is publicly urging Argentinians to “stay the course” and not “derail the will for change” in the upcoming October elections – further highlighting the institution’s support for regimes that align with US interests, regardless of rising social and political unrest – despite the Fund’s apolitical mandate.
In the absence of meaningful debt relief, the IMF has published a Playbook through the Global Sovereign Debt Roundtable, offering country authorities guidance on sovereign debt restructuring, based on recent experiences. While it advises on engaging creditors, securing concessional financing, and managing comparability of treatment and claw-back clauses, it fails to address the deeper flaws of the dysfunctional Common Framework. Recent restructuring cases highlight persistent shortcomings, as the mechanism continues to deliver too little, too late. Instead of early and substantial debt cancellation, the model favours cautious restructuring and austerity measures – shielding private creditors and increasing multilateral debt levels.
In the absence of appetite for comprehensive debt restructuring, Spain, as FfD4 host, is proposing a new hub for debt swaps, despite CSO warnings that it could prove costly and bail out creditors. Beyond initial technical assistance, discussions also include a trust fund for debt buybacks backed by rechannelled Special Drawing Rights (SDRs). Alongside this, the newly formed African Leaders Debt Relief Initiative and growing calls for an intergovernmental process on sovereign debt at FfD4 signal a broader push for systemic reform to address the mounting debt crises in a fairer and more sustainable way (see Observer Spring 2025).
Despite failure of Billions to Trillions, Banga deepens private sector approach – raising accountability concerns
Banga set out his efforts to deepen the Bank’s approach to crowding in the private sector in an op-ed in the Financial Times on 1 April, in an approach fully aligned with the new US administration (see Dispatch Springs 2025). However, whispers during the Meetings from policymakers lamented that the discussion remains largely framed around inputs rather than development outcomes. Moreover, as conceded by World Bank chief economist Indermit Gill in December, the Bank’s Billions to Trillions approach is failing on its own terms, “Since 2022, foreign private creditors have extracted nearly $141 billion more in debt-service payments from public-sector borrowers in developing economies than they have disbursed in new financing.” At the above-mentioned Jubilee Debt Commission event, Prof Mariana Mazzucato was critical of a continuing focus on ‘financing gaps’, saying “this makes it sound like we are filling a hole”, leading to a lack of focus on the quality of financing, and whether it is aligned with the core missions of the economy (see Observer Autumn 2024).
Another concern posed by Banga’s continued private sector bonanza is how to ensure effective accountability in World Bank Group (WBG) projects. While accountability groups hailed the release of the IFC’s long-awaited remedy framework before the Meetings, persistent rumours of a potential merger of the WBG’s two independent accountability mechanisms, the Inspection Panel and the Compliance Advisory Ombudsman, remain. As the IFC begins a review of its Performance Standards, a number of recent high-profile scandals related to IFC investments point to the need for the Bank to deepen its commitment to accountability issues, if its private sector efforts are to have a positive development impact (see Observer Autumn 2024).
Delays in IMF reviews cast doubt on reform
Amid a difficult political context, delays in the IMF’s 17th General Quota Review (GRQ) and related governance reforms raise serious concerns about the institution’s credibility and relevance. The US has not yet ratified the 16th GRQ, and the deadline to establish principles for the 17th quota realignment has been pushed from this summer to the spring of 2026. Similarly, both the Comprehensive Surveillance and Conditionality Reviews have been delayed by a year, with no terms of reference or engagement framework disclosed (see Observer Spring 2025). Although some shareholders are acknowledging troubling trends – including declining loan performance and rising average loan sizes – there is little clarity on whether the reviews will drive the reforms needed to meet today’s complex global challenges.
Previous Conditionality Reviews and Independent Evaluation Office (IEO) reports have identified major shortcomings in the IMF’s approach: persistent over-optimism in growth projections, systematic underestimation of the contractionary effects of fiscal consolidation, limited efforts to mitigate austerity’s impact on growth, and the need to sharpen debt sustainability tools. Yet, little appears to have changed. The Fund’s continued reliance on unrealistic fiscal targets has fuelled repeated cycles of austerity, trapping countries in dependency and stalling recovery. Meanwhile, its consolidation policies continue to disproportionately harm vulnerable groups, especially women. At the Spring Meetings, global unions demanded that the IMF stop ignoring its own analysis and evidence from civil society, abandon its failed austerity orthodoxy and overhaul its policies to put workers, social protection and climate action at the centre of its operations.
Civil society space under threat at the Meetings
The narrowing space for civil society engagement has compounded concerns about the direction of the IMF and World Bank. Civil society participation was notably subdued during the Spring Meetings, as many CSO representatives – particularly from the Global South – did not travel to the United States due to fears of detainment at border control. Reports also suggested that climate-focused and progressive US non-profits could face renewed attacks on their tax-exempt status during the week of the Meetings, although these have not yet materialised.
In this bleak context, a few glimmers of hope seemingly emerged. The World Bank’s launch of the Civil Society and Social Innovation Alliance (CIVIC) marks a potential step toward strengthening engagement with civil society and fostering more participatory development processes – although it still remains unclear how much funding will be dedicated to CIVIC or how it will be operationalised. Meanwhile, recognising the centrality of civic space in reimagining global economic governance and driving change, a group of philanthropic foundations has launched the Collaborative for a Gender-Just Economy. This initiative supports CSOs working on gender and economic justice issues, advancing feminist and rights-based models, embedding gender equality into macroeconomic policy, and backing Global South-led efforts for a gender-just economy.
In the absence of meaningful reform within the BWIs, civil society is turning to FfD4 as a space for advancing systemic change – a forum where civil society, governments and other stakeholders can push for a reimagined global economic governance grounded in justice, gender equality and sustainability.
