Spring Meetings 2026 Preamble: ‘Rupture in world order’ further challenges IMF and World Bank’s legitimacy
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Article summary
- Rising global instability, discord among key shareholders, escalating violations of international law and inadequate responses to Iran war deepen BWIs’ legitimacy crisis.
- World Bank discusses industrial policy, although focus on private capital mobilisation at BWIs remain.
- Persistent governance imbalances and stalled reforms of the global financial architecture raise concerns as the peace-development-humanitarian nexus erodes.
The IMF and World Bank Spring Meetings, taking place in Washington DC from 13 to 18 April, will unfold against a “rupture in the world order,” as described by Canadian Prime Minister Mark Carney in his speech at the World Economic Forum in January, warning of “a harsh reality…where geopolitics…is subject to no limits, no constraints.” Violations of international law, from Israel’s genocide in Palestine, to the illegal abduction of Venezuela’s president, the economic strangulation of Cuba, and the war launched on Iran and Lebanon, reflect significant changes in approach by the United States – the largest and veto-holding shareholder of the Bretton Woods Institutions (BWIs, i.e. IMF and World Bank) – to maintain its hegemony over a shifting global economic order.
Against this backdrop, the neoliberal policy framework long promoted by the BWIs appears to be reaching its limits – the cumulative outcome of decades of policies that have shaped the current global economy. In a 25 March piece, University of Cambridge political economist Jostein Hauge argued that for decades “the development ladder was being kicked away” as the World Bank’s economic doctrine – propagated alongside its sister institution, the IMF – since the 1980s, marginalised industrial policy in favour of liberalisation, privatisation and market-led growth, thereby maintaining “a hierarchy in the world economy” that “served the West well”.
Civil society and academics – reinforced by East Asia’s demonstrable development gains through industrial policy, which the BWIs actively opposed and stigmatised – have long argued that this neoliberal model failed to drive economic transformation (see Observer Autumn 2024), deepened inequality, and entrenched a global order serving Global North states and private capital (see Observer Autumn 2025). As the so-called rules-based order underpinning this model fragments, the BWIs are, at least rhetorically, reassessing elements of their orthodoxy. On 17 March, the World Bank released a major research report on industrial policy, with the Bank’s Chief Economist Indermit Gill noting that the Washington Consensus–era advice “has not aged well” and holds “the practical value of a floppy disk” – a statement that would have been unthinkable from the institution previously.
Yet, as ever, it remains unclear how the Bank’s research will influence policy. The rhetoric of a ‘post-aid world’, set against declining official development assistance and the diversion of shareholder resources toward militarisation, is being used to justify a renewed push for private capital mobilisation (PCM; see Observer Spring 2026). By redoubling efforts to create ‘enabling environments’ for private investment and treating domestic resource mobilisation as a national responsibility, rather than one shaped by an unjust global tax architecture, the BWIs risk further shrinking the policy space needed for effective industrial policy. In overlooking the systemic drivers of revenue loss, this approach highlights the BWIs’ broader failure to support urgently needed structural reforms to the global financial architecture (see Observer Spring 2025), not least seen in their limited recognition of the macroeconomic and developmental gains that could arise from the UN Tax Convention.
BWIs largely silent amidst worst oil crisis in history
As the war on Iran triggers what the International Energy Agency has called “the worst oil crisis in history“, surpassing the 1979 oil crisis, the BWIs are asleep at the wheel, failing to publicly raise the alarm about the global economic consequences of the war. The closure of the Strait of Hormuz – a chokepoint normally carrying roughly 20 per cent of global oil supply – and attacks on oil and gas infrastructure are causing a severe commodity-supply shock, with cascading effects across the Global South: spiking energy costs, rising debt-servicing costs, and surging food and commodity prices, forcing many countries to implement Covid-style demand-side measures.
Despite its mandate to safeguard global macroeconomic stability, the IMF has chosen a suspicious silence, according to Nabil Abdo of Oxfam International, claiming it is “closely monitoring developments” and will assess the situation in its April World Economic Outlook. In a 30 March statement, the Fund merely warned of rising prices and fuel inflation, advising that “countries with limited reserves and little fiscal room to maneuver should be especially cautious” – ignoring its own role in creating these conditions, and failing to support large-scale debt cancellation as developing countries face their highest debt levels since the 1990s (see Observer Winter 2025).
This contrasts with the Fund’s response to Ukraine, which Abdo suggests reflects IMF leadership’s fear of angering the US administration – a dynamic that raises broader questions about the Fund’s ability to act impartially. Concerns are compounded by the Fund’s recent Article IV consultation with the US, which is unlikely to fully address the global spillovers of US policies, including tariffs and military interventions. If the IMF applies one standard to powerful economies while prescribing austerity elsewhere, its credibility as an ‘impartial institution’, already strongly criticised by civil society, will be further and significantly undermined, including in the eyes of financial markets and states in the Global South.
Yet, the BWIs’ political alignments are unlikely to shift, as longstanding governance imbalances remain unresolved (see Observer Summer 2023). Progress on IMF quota reform remains politically constrained. Principles from the 16th General Review of Quotas, expected at the Springs, are unlikely to include meaningful changes, and will instead likely be framed as progress toward the 17th Review, now delayed to December 2027 – despite the 16th quota changes still awaiting ratification by the US Congress. While European shareholders may be willing to cede a small share of quotas to underrepresented emerging market economies, this remains limited and inadequate. More broadly, the process falls short of meaningful redistribution of voting power – in line with G77 calls for a new quota formula and greater equity in leadership and representation. Similarly, the World Bank shareholding review (see Inside Institutions, The World Bank shareholding review – reform or ritual?), also due at the Springs, is expected to deliver disappointing results, with no significant redistribution of shares and only limited commitments on voice and representation.
IMF reviews risk entrenching policy incoherence and austerity bias
As the Springs approach, the Fund is advancing a series of interlinked reviews – on conditionality, comprehensive surveillance (CSR) and the low-income country Debt Sustainability Framework (LIC DSF). Civil society is concerned about gaps in these processes, particularly as their outcomes will shape the Fund’s role in an increasingly fragile global economy. While reviews of conditionality and the LIC DSF have been on the Fund’s management work plan since 2025, civil society consultations have only recently accelerated following a joint civil society letter in March to the Fund calling for greater transparency, strengthened consultation and accountability – suggesting a reactive rather than proactive approach to reform. Longstanding critiques highlight that conditionality reinforces procyclical adjustment and constrains fiscal space, while the LIC-DSF shapes borrowing limits in ways that can lock countries into austerity trajectories (see Inside the Institutions, What are the main criticisms of the World Bank and IMF?).
These shortcomings are reflected in the Fund’s broader surveillance work (see Observer Summer 2025). Evidence from surveillance between 2011 and 2025 shows persistent policy incoherence and weak analysis of trade-offs, particularly on distributional, gender and climate risks, suggesting social and environmental priorities remain inconsistently integrated (see Briefing, Brace for impact: Social and gender inequality in IMF surveillance). These critiques are corroborated by the IMF Independent Evaluation Office’s fiscal policy report released in December 2025, which confirmed that trade-offs between fiscal sustainability, growth and distribution remain subordinate to fiscal consolidation in low- and middle-income countries (LMICs; see Observer Spring 2026). IMF staff have not systematically assessed how adjustment policies burden low-income households, despite evidence that austerity can exacerbate inequality and trigger political backlash and instability (see Observer Summer 2018).
At the same time, civil society research has shown that IMF-supported programmes continue to promote export and extractive-led growth – including fossil fuel expansion – for debt repayment (see Briefing, IMF surveillance and climate change transition risks), while reliance on foreign-denominated lending amplifies volatility and entrenches US dollar dominance. Together, these dynamics reveal a contradiction: even as the Fund acknowledges inequality and climate risks, its policy advice reinforces the imbalances it claims to address. Civil society also notes apparent backtracking under US pressure, including in the restructuring climate and gender departments.
World Bank acknowledges need for industrial policy, but doubles down on private capital mobilisation
With ‘jobs’ positioned as the World Bank’s new “north star“, civil society have warned that its focus on “supporting a business-friendly environment and mobilising private capital” overlooks job quality, failing to confront how longstanding advice on liberalisation and privatisation has driven a ‘race to the bottom’ in labour standards (see Observer Winter 2024). The International Trade Union Confederation argued in October 2025 that, “the Bank must draw upon the significant work trade unions and the ILO [International Labour Organisation] have done to measure and promote decent work, and meaningfully engage workers at the design, implementation, and monitoring stages.”
Despite its research finally recognising the importance of industrial policy, the World Bank has yet to show how this will translate into policy. An internal restructuring is underway at the Bank, with an October 2025 Devex piece describing it as “bringing a variety of different divisions from its public and private sector arms together into centralized operations.” The Centre for Global Development warned in October 2025 that this “increases the risk that policy research is guided by what is good for the private sector…rather than the economy,” adding that it “will supercharge conflicts of interest.” As such, it remains unclear how the Bank will resolve these contradictions and transform its operations to ensure positive development impact (see Observer Autumn 2024). Worryingly, the Spring Meetings’ flagship event where the Bank will launch its Water Forward strategy to 2030 highlights a persistent tunnel vision (see Observer Spring 2024, Summer 2023), with one key pillar focused exclusively on “enabling private sector participation and commercial financing.”
Global instability sharpens scrutiny of World Bank’s fragility strategy
At the Spring Meetings, civil society will closely monitor the new Fragility, Conflict, and Violence (FCV) strategy ‘Refresh’ (see Observer Autumn 2025). With 60 per cent of the world’s extreme poor projected to live in FCV settings by 2030, concerns persist that the Bank’s FCV strategy overlooks how its own economic advice has contributed to inequality and poverty, key drivers of fragility (see Observer Autumn 2025, Autumn 2019). The Bank’s Independent Evaluation Group found in November 2025 that, despite an emphasis on context-specific engagement, implementation fell short, citing “limited policy flexibility” and a failure to adapt to FCV realities. The Bank’s involvement in the US-led Board of Peace (BoP) and as trustee of the Gaza Reconstruction and Development Fund – which promotes a private-capital first approach to reconstruction and lacks any meaningful Palestinian input – raises further concerns about its claim to be “non-political” in conflict settings. The widely held understanding that the BoP represents an US effort to undermine the UN, which is undergoing a difficult reform process, adds to concerns that the Bank is contributing to the erosion of efforts to support the peace-development dynamics (see Observer Spring 2026).
As the Bank’s largest shareholder, the US, is clamping down on ‘climate’ and ‘gender’ (see Dispatch Annuals 2025), civil society has raised alarm that gender was omitted from the February FCV strategy refresh. The future of the Bank’s climate work also faces uncertainty, with the Bank’s current Climate Change Action Plan expiring on 30 June and no clarity on its extension. With signs of backsliding already emerging – including consideration of renewed upstream gas financing (see Observer Summer 2025) and lifting the ban on nuclear – it remains to be seen whether the Bank will keep its climate commitments (as supported by the majority of its membership) or defer to the interests of its largest shareholder.
These developments are not isolated but reflect broader systemic shifts across the multilateral landscape, including democratic backsliding and increasing global military spending. As the UN’s peace and development functions remain underfunded, the weakening of the peace-development-humanitarian nexus risks further accelerating instability and diverting resources away from long-term development and conflict prevention. In this context, the BWIs’ limited engagement with social and economic rights contributes to a broader erosion of the social contract (see Observer Autumn 2025), as structural adjustment policies and fiscal consolidation deepen inequality without addressing its structural drivers. Unless these institutions address both their governance deficits and the impacts of their policy advice, their credibility – and their capacity to support global stability – will continue to erode.
