Strained multilateralism: Post‑Seville commitments, IMF responsibilities and a rights‑aligned economic order
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Article summary
Notes from the Civil Society Policy Forum on April 14, 2026 titled Strained multilateralism: post‑Seville commitments, IMF responsibilities and a rights‑aligned economic order. Multilateral cooperation is under strain at a time when global debt distress, tax negotiations, climate disasters, and widening inequality demand coordinated responses. Building on sessions co-led by CESR and partners at recent Spring and Annual Civil Society Policy Forums, this panel advanced discussion on the IMF’s responsibilities within a fragmented global governance landscape. It followed up on post-Seville commitments on debt architecture, evolving orientations on global tax cooperation, and the IMF’s role in climate finance debates linked to COP processes and broader proposals to reform the global financial architecture.
Moderator
- Mahinour ElBadrawi, Global Partnerships Lead, Center for Economic and Social Rights (CESR)
Panelists
- Emma Burgisser, Economic Justice Lead, Christian Aid
- Daniela Berdeja Ruiz, Senior Policy Advisor, Latindadd (Red Latinoamericana por Justicia Económica y Social)
- Imenne Cherif, Research and Economic Justice Advisor, MENAFem
- Robert Powell, Special Rep to the UN, IMF
A recording from this session can be found online here.
Mahinour: This is a continuation of a series of conversations that attempt to connect the dots about reforms to the global economic order within different multilateral organisations and systems, to try to find where the gaps for coherence are, the opportunities and constraints. We proposed the session to look at ‘strained multilateralism’ but since then things have escalated quickly and now we’re beyond the point of strain. Faith in the multilateral system is thinning and that makes this conversation crucial. Acknowledging that we’re already in a space where fiscal policy is challenging, especially in Global South countries, with the impact of the climate and debt crisis, disproportionated impact on women and vulnerable communities, the war economy and shocks increasing, there is a need to look at what can be done structurally so that we can reverse things as opposed to continuing on the same path that arguably got us here. What are the conversations on tax and debt reforms, how does that intersect with systemic issues, the 4th International Financing for Development conference (FfD4) as the main convening space for delivering a new economic system that can deliver for people’s rights, dignity and a liveable planet.
Emma: Focus on the outcomes of FfD4, on the Compromiso de Sevilla and specifically on Chapter F on the International financial architecture and systemic issues, and the sub-chapter on agreements to further strengthen global economic governance. This agreement was reached last year between 192 countries, so that’s effectively universal minus one. In the text of the Compromiso we have a number of agreements including strengthening UN leadership to arrive at a stronger and more coherent international economic and financial architecture, including that additional measures are needed to ensure that governance measures accurately reflect the diversity and complexity of the world; that the international community must work together to broaden and enhance the voice and representation of developing countries in international and financial institutions. It then gets more specific, underscoring the need to broaden and enhance the voice of developing countries, in norm setting, global economic governance and decision making to deliver more effective, inclusive and accountable institutions. Relating to the IMF and World Bank, to explore quota share realignment and consider increasing basic votes. That’s a vote that’s given to all IMF members equally, but only counts for 5 per cent of total vote share. For the World Bank, there was an encouragement for governors to conduct a shareholding review to achieve equitable decision making.
In the two-year lead up to FfD there were many official positions expressed by other groups of countries. 134 developing countries came together in a joint position to advocate for the highest level of ambition in the advancement of long overdue reforms that are fundamental to ensure global economic governance. They asked for basic votes to be restored to 11 per cent of the vote share. 44 countries that make up the least developed country group called for the establishment of a high-level UN position on governance reforms at the IFIs (international financial institutions). They feel that there is a lack of progress on BWI (Bretton Woods Institutions) reforms.
In contrast, the IMF is about to publish and agree principles to guide IMF quota realignment, because the last two quota reviews have resulted in no realignment of vote shares. To make progress they’ve broken it down into phases with the first phase being the development of these principles. The principles published this week don’t bring anything new, worse than that, they risk reinforcing the broken system that currently exists, as they stress that the process should be gradual. Compare that to the 134 countries statement which stresses urgency. There’s nothing on international cooperation so it’s a missed opportunity. A small number of member states are telling us that we can’t start discussions on the 17th GRQ until the US has ratified the 16th. But that’s not technically the case, according to the Articles of Agreement. These are very complex discussions, and it would help if they start now. Even if the 17th discussion gets underway, and countries that are overrepresented give up their vote share, at best we’re talking about protecting the current vote share of PRGT countries.
On the World Bank, it is completing its 2025 shareholding review. There was a report published this week that makes clear there is no agreement on vote share realignment via the main channels. There are instead eight agreements under the ‘voice’ channels’, which involve capacity building of LIC board members and creating a working group on the board. So we’re not even talking about consolidating European shares on the board of the World Bank. That wasn’t even part of the discussions, we’re talking about marginal changes. While we welcome those voice changes, I think it shows you just how far we are from what 134 plus countries actually, 192 countries, are actually asking for in a space like FfD.
Daniela: I would like to highlight and reiterate the importance of global economic governance and the need to undergo democratisation. I will focus primarily on sovereign debt issues in light of the results from Sevilla, and looking beyond that. Two main points. The first is to emphasise that in the run-up to Sevilla and throughout the process, the positions of Global South countries on the debt chapter were very clear. They demanded reforms that adequately address persistent and endless debt problems. There was a clear call for the initiation of a framework convention on sovereign debt that was not creditor centered. Beyond Sevilla, there is the recent Africa Group’s position on debt that specifically reiterates this call of the framework convention on sovereign debt. These frameworks would address sovereign debt problems, but at the same time, under democratic governance addressing not only debt, but the need for governance under the auspices of the UN.
Going back to the outcomes of the conference on financing for development, this position didn’t manage to go into the final negotiation stages, but instead, there was an agreement and a commitment to initiate an intergovernmental process to reform the debt architecture. This is the key to address the debt convention in the future, including a permanent debt workout mechanism that is rules-based with an independent arbiter. That is what we don’t have right now. A transparent and orderly debt restructuring processes. We see a window opening and an opportunity to truly start discussing a reform of the debt architecture.
My second point is to contrast the IMF’s role in shaping the international financial and debt architecture, particularly with regard to solving this debt crisis, but also looking at preventing future ones. My question is, why do we keep talking about debt problems and crisis every so often in what seems like a cyclical dynamic? It is because, to date, no definitive solution has been implemented. There are two issues with the current responses in the present challenging context that we have. The first one is there is a discussion between solvency and liquidity approaches. Let’s say this is the diagnosis, and based on that diagnosis, what are the current responses driven by the G20, by the IMF and the World Bank? There is a growing debt service burden due to high interest rates, high borrowing costs, greater concentration on bonded debt that sometimes are more opaque. And in the face of a shock, this can quickly turn into a solvency crisis. So, it is becoming increasingly difficult for several countries to carry out refinancing operations. There is a lot of pressure on the budgets, on the revenues of Global South countries, so limiting and crowding out social spending, for instance, on health education and social protection.
And on the other hand, to address these growing debt problems, I will mention three responses from the Bretton Woods Institutions. The Common Framework, which has encountered various difficulties, starting with the unwillingness of private creditors to engage in restructuring, the comparability of treatment problems, processes that are lengthy and costly for debtor countries. And this is why they delay restructuring to the point where they have no option but to default. And to prevent this, the IMF provides financing, which in the end constitutes bailouts to private creditors. The second response to what they see as temporary liquidity problem, is the Three-Pillar approach, which partly comprises some issues that, in general, already fits so there is nothing new there. And it fails to address the current needs and does not provide a comprehensive response, particularly for a middle-income country. And the third response would be the usual that we see. When debt levels are growing, fiscal adjustments start. So, this means more IMF programs, more conditionalities, and more austerity measures in Global South countries. The IMF itself has shown that fiscal adjustments alone do not significantly reduce debt to GDP ratios. However, in practice, that is the advice they give to countries with debt problems. And this means that not only the economy that is already experiencing economic difficulties or crisis will slow down, but also social effects that are unequally distributed. Finally, we are facing an ever-worsening climate emergency that is having direct impacts on our lives. And if we want to have a planet to live on and ensure our survival, we must not ignore the fact that financial institutions must be held accountable for their impacts. And specifically, I am referring to addressing climate and the environmental crisis. Just one example, stop financing fossil fuel or environmentally damaging projects. To conclude, the responsibility of the IMF is to tell the G20 and the most powerful members that maintaining the status quo and the responses to the current crisis are not going to be enough. We are going to have another global crisis that could have more difficult results for people and planet. We must move beyond this current solution, beyond the common framework and offer something more, thereby opening discussions around, for instance, the intergovernmental process. In a more shock-prone world, we need real changes. We don’t need more of these small adjustments. So let’s not lose sight of this challenging world we’re living in right now.
Imenne: The debate on taxation is very important and it’s a great opportunity. In reference to what my colleague Emma just said about the ratification of the IMF’s 16th quota review, it’s a good example to see the UN Framework Convention on Tax Corporation, what is going on with the US, who stepped back from the negotiation. A country stepping back should not stop us from reforming and continuing negotiations to improve the economic situation of countries. And that means the human rights situation of people.
I will build on what has been said by my colleagues through comments and perspectives grounded in the Rabat Roadmap. For those who are not familiar with Rabat Roadmap, it is the feminist and the decolonial framework developed during a feminist convening last year in May in Rabat, Morocco. It calls for transforming the global economic system. And it demonstrates how revenue losses lead to austerity and underfunded public services, shifting the burden onto women and vulnerable communities. And this framework will guide my intervention today. From this perspective, I want to stress that tax justice cannot be understood in isolation from the broader global economic system. What we are discussing today is not only about fixing tax rules or finding more sources of financing, it’s about transforming the global system that creates inequalities.
Tax should be here to create a distributive tool to reduce inequalities and should not be seen in isolation from the whole system, including the debt burden. Reforming the tax system without looking at the debt sustainability analysis framework, at IMF programs and how we analyse and how we manage debt cannot solve the situation. One of the questions is, will this framework address wealth concentration? Not just at the national level but also at the international level and distribution also at international level – national level between citizens, but also as citizens of the world. How this framework addresses wealth concentration and corporate power, creates binding rules that shift power toward the Global South, to deliver resources at the scale needed to transform care systems. When we talk about care systems, we do not want to think of it as a sector but to reform the whole economic system to be serving people and human rights.
We look at tax reform as a transformative approach, not just taxation. And this brings me to the question of debt. We cannot talk about taxation without talking about debt cancellation and debt relief. We cannot talk about fiscal space without addressing climate injustices, and the need for reparations for countries and people who are affected, and the financing of harmful projects in our countries. We cannot think about improving governance and increasing transparency without this redistributing power that I mentioned. And this brings me to the notion of democracy that I wanted to emphasise in my intervention. When I think of democracy, it’s the whole decision-making process at national level and also at the global level. Tax reform at national level without democracy, without participation of women, movements, of citizens and all the stakeholders at national level cannot be effective. Even if we claim that we are doing progressive taxation reforms. I can take the example of my country, Tunisia, we can clearly see this contradiction. In recent years, Tunisia has introduced civil tax reforms that appear to move in a progressive direction, including corporate tax reform – corporate tax rates have been increased, particularly for the financial sector, which is one of the problems in Tunisia, and exceptional contributions on large companies have been introduced and are now becoming permanent. These efforts to improve tax compliance seem to be steps toward fairness, which is true to some extent. But when we look closely, a different picture emerges. First, these reforms are primarily driven by fiscal crisis. So, they are only here to create fiscal space to solve the problem of very high debt payments. They are not collected by the country to increase public services, and public spending on public services. They are not here to reform the economic system or to improve the situation of people. They are more resources to make the country pay for the high level of debt. And here, it’s always a good opportunity to talk about high interest rates and the IMF surcharges that our countries are paying.
Robert: I’ll focus this first part on the governance side. The IMF is not a development institution. Having said that, it’s widely recognised by all the membership, that pursuing the IMF’s mandate of helping countries achieve and maintain economic and financial stability and sustainable growth is an absolute prerequisite for seeking their wider development goals. We can also call those human rights goals, or social justice goals. Things like health spending, education spending, social protection, we all know that that’s the good stuff that we’d like to see more of. And certainly, it’s consistent with many countries’ goals, and with the SDGs that were rooted in human rights.
It’s important to understand the IMF and other UN and development agencies have highly complementary roles. It’s not that it’s one fighting against the other. The IMF was an observer, and not a party to the intergovernmental negotiations of the Seville commitment. Obviously, we’re observers to other UN processes and negotiations, like those that go on in the General Assembly on tax. We’re an observer there in COP. We’re observers in the Paris Club. We’re not party to the negotiations. And it’s very important that we maintain that neutral role for credibility. But obviously, the IMF is a very important part of the UN system. And like other specialised agencies, we have our own governance framework, ably described earlier, independent of the General Assembly. We have our 191-member Board of Governors representing all the member countries, and each is represented by one of the 25 executive directors on the executive board. They each do have a voice. For any action coming out of Seville or any of these other processes and conferences, and to be implemented through the IMF, two things would need to happen. First, the IMF board has to agree that it’s a good idea. But also, the IMF Board has to agree that it’s a priority for the institution to act on within the limited resources it has at its disposal. That includes staff resources, financial resources – it needs to find its way into our workplan, known as the global policy agenda. It might be that we don’t have the staff resources to do it, and that’s just the reality. Or it may well be that it’s not a bad idea, but we know there’s absolutely no commitment from large parts of the membership to do it.
Over the past two years the executive Board of 25 members – of the 25, 16 are from the G77, they’ve reviewed our contribution to the financing for development agenda and this culminated in a board meeting which informed our contributions to the conference, that board paper is a really important part of the FfD discussion. It was a consensus view in a very difficult climate. The IMF board tries to work as much by consensus as possible. A good example of that was the recent reforms to the PRGT, which is a complicated topic because we wanted to increase the capacity of lending for the PRGT, also linked, of course, to the issue of surcharges. Low- and middle-income countries, and advanced economies, the lenders to the IMF often, have quite differing financial interests. And we’ve worked tremendously hard to get to something that everyone could buy into, in the end. It wasn’t that one group forces the other group. The IMF board really does try to work by consensus as much as possible. We’re working at the moment on reforms to the low-income debt sustainability framework, the LIC DSF. There’s a lot of work going on to make sure that whatever changes are made to that is not something that one group is forcing on another, and it’s doing its job in the best way it possibly can. I would hope that when that gets finalised by hopefully later on this year, September maybe, there will be a broad consensus.
You’ll find actually in the FfD report, quotas and governance are not mentioned that much but we have been advancing the work on principles to guide future discussions. This is ultimately an issue for the membership, it’s not something that a humble civil servant like myself can get too far into. There’s these principles that we promised to work on by the Spring Meetings. Is it going tremendously fast? No, it’s not going tremendously fast. We know that this is tough stuff for the membership to work on. One of the most important interventions I remember hearing in Seville was from a minister from Guinea who said quota reform is really important but don’t let it divert attention from the important policy issues that countries are facing. Protecting the position of poor countries is important. Where it’ll come out, I can’t say, obviously. It’s going to take time to see these principles work out. Changing the quotas is not going to dramatically change the challenges that these countries have to deal with. We’ve got this four trillion gap. How are we going to fill it? Most of that’s probably going to be domestic revenue mobilisation. It’s a core part of the Three Pillar Approach, which all the countries recognise is important. Especially in this really difficult time, the current war environment, the pressures that we know are coming, it is going to put more pressure on debt. We are going to have to watch that very closely. These conditions mean different things for different countries. And it’s the same with the debt story. Some countries need restructuring and we need to speed up the processes for that. And the Common Framework has made progress on that. Restructuring debt is much harder now than it was 20 years ago because you’re dealing with private creditors, you’re dealing with domestic debt.
Questions and answers
Gerald Chen-Yung, Chief Investment Officer of the National Public Pension Fund Association: The question I have concerns certain constituencies and administrations that have made moves to emasculate some of the authority and breadth of implementation of multilaterals, be it military in terms of NATO, economic, in terms of both the Fund and the Bank and others, but there’s a general trend out of certain quarters, to emasculate the authority and scope and responsibilities and enforceability and implementation of multilaterals. How are we dealing with this?
Patricia Miranda, Latindadd: Indeed, throughout the FfD4 process towards Sevilla, the IMF is an observer, but the IMF has a voice and a very strong one. And part of the discussions in Sevilla was on the need for reform of the international financial architecture and the IMF is a very important actor in terms of the rules, the guidelines, and many policies. The IMF has a very strong voice and also is an advisor and has very strong recommendations throughout the process. Since the US is the main shareholder of the IMF and stepped away from the Compromiso de Sevilla, are there any specific points that are at risk of not being fulfilled in the Compromiso de Sevilla related to the IMF implementation?
Speaker from Alliance of Nigerian Diaspora living in the United States: According to IMF data, global debt will increase to 100 per cent of GDP in the next decade. And most of these are inadequate public policy as related to public health, education and climate change. And as you all know, we’re currently undergoing an energy crisis in the world. So what kind of items do you have in your toolbox to help underprivileged and marginalized populations navigate through this crisis?
Online question: What is the least major reforms that need to be implemented in the World Bank Group and IMF from good governance to best business practice? What does it take to scale AI and how to align IMF and World Bank mission, vision, objectives and goals with people?
Online question: Given the high ongoing debt crisis and IMF-supported fiscal adjustment, how is the Fund ensuring that its policy advice doesn’t reinforce austerity measures that impact low-income populations?
Imenne: Tax reforms are part of IMF advice to countries, but what we see is that this advice is primarily approached as a tool for fiscal consolidation, rather than as a tool for distribution or justice or structural transformation. There is a new Oxfam report, Time to Walk the Talk, IMF Tax Advice between 2022 and 2024 that covers IMF tax policy advice to low-income countries and high-income countries and middle-income countries between 2022 and 2024. The report is quite comprehensive and what we see is that there is no reference to any advice regarding the wealth tax or taxing the rich, less than 3 per cent of IMF tax recommendations target wealth and capital income. We see this as a structural bias against redistributive taxing. The majority of the advice – 59 per cent of it is regressive, promoting VAT and consumption taxes that does not differentiate between income of people. The core problem is the weak integration of inequality and gender, distributional impacts, less than 10 per cent of recommendations mentioned gender and over 90 per cent of advice focuses on minor and technical policy, not structural reform.
Emma: I think the answer is that the governments who still believe in multilateralism need to fight back, need to protect it, and make the case for it. And I think that what the Fund and Bank are doing on governance reform right now isn’t helping with making that case. I think it’s further breaking trust and that’s not because of bad intentions. It’s because the system was designed to withstand this change and shifting power. We hear a lot about consensus decision-making inside the IMF but think about what it would be like for you if you go into a room with a bunch of people and you’re asked to come up with agreements together. But you know that if it comes down to voting, your vote is completely negligible. What are the dynamics going to be like in that room if it comes down to it. In addition to that, you and your entire people might be completely reliant on the financing from this institution.
There are real power dynamics going on within that so-called consensus conversation that can get obscured when we talk about it in that way. Yes, technically, officially, LICS and PRGT countries are represented in IMF decision-making. There’s many ways of packaging and framing this. Today, the United Kingdom alone holds almost double the amount of voting power in IMF decision-making than 15 of its former African colonies combined. Yes, they technically are there through a constituency of more than 20 countries, but what does that really look like?
Decision-making in the UNGA is very complicated because we’re talking about 193 countries with different ideas and priorities. We haven’t been able to reach agreement in the IMF since 2010 on any vote share realignment. I would argue that to come to an agreement between 193 countries on something as difficult as how this incredibly important institution should be run, you probably need career diplomats who have lifelong experience forging these types of very difficult agreements rather than mostly economists that are here. I cannot agree more about how urgent these policy questions that we need to address are, but the reason why we’re talking about governance is because the answers to the policy questions might be different if there are different people making some of the decisions. There’s a reason why the solutions being brought forward in a space like FfD, where all countries have an equal voice are different. That’s where we talk about things like reforming the SDR system to better work for the needs of developing countries. That’s where we talk about an intergovernmental process on addressing the gaps in debt architecture.
I just want to share that Christian Aid, together with MENAFem, and with other partners has been convening spaces among civil society, among different movements and different geographies to help us think and envision what kind of reforms we need that don’t just respond to this incredibly limited environment that we have right in front of us, especially inside these institutions. And we’re in the process of sharing and collating some of the results and outcomes of those discussions. What would it look like if some of these civil society communities who are facing some of the brunt of poverty and inequality in countries like Sierra Leone or Zimbabwe, women’s rights organisations, faith-based groups, what would they put together if they were asked to talk about principles of IMF governance reform? What we hear from them is things like recalling principles of sovereignty, principles of international solidarity, African principles on consensus government, based on Ubuntu traditions, principles of reparative justice that the African Union is now showcasing in the ten years of reparations, principles of care, principles of human rights. They would be at the center of a governance structure that we design.
Robert: Multilateralism is under attack. I won’t deny that, but certainly from an IMF perspective, we have always tried to have a good relationship with our largest shareholder and the rest of the Board for that matter. This links up to the question about the Fund’s work as part of the follow-up to Sevilla, whether it’s our agenda on debt, capacity building, especially in the fiscal area. The Three-Pillar approach is important on this issue of fiscal space, and the countries who are finding it really hard, they’ve got sustainable debt, but interest rates are going up, they’ve got a lot of investment pressures and they want to do more on health, education, social protection. The Three-Pillar approach is the international community’s consensus approach. What are the three pillars? First one is domestic reforms with domestic revenue mobilisation, and domestic financial markets. The second one is very important. These countries, especially the poorest, need more international support. That’s both from international organisations like the Fund and the World Bank. They need concessional money. They need more grants. I’m surprised that no one has mentioned grants in this meeting yet. It’s a great way to avoid debt crises. ODA is under pressure at the moment, but international support is an important part of the Three-Pillar approach.
And then there’s ways of working on getting the debt servicing down a bit, liability management, guarantees, blended finance, a lot of things the World Bank is doing in this space. And for those countries who are insolvent, we need to speed up debt restructuring. But for many countries, the goal of getting more resources for the good stuff, the solution to that is more financing rather than debt restructuring. It’s rolling over the debt, getting more external financing, and strengthening the institutions to allow them to handle more debt. If you look at who are the countries with the highest debt, it’s developed countries because they have got themselves a system where they can handle more debt. The challenge is that many of the poor countries don’t have the domestic revenues to allow them to have higher debt levels.
Daniela: I would like to reiterate or emphasise the thing that Robert said before around the IMF as observer during this negotiation. In fact, I think they have an active role in advising mainly in the debt chapter. And so the advice is very taken from Global North countries. Any attempt to include communities, or commitments to change the system, the advice was to take it out because there is not full support. So I think they have a role. They are not only neutral for instance, regarding the intergovernmental process, they say, well, this could be a duplication. But my question is, duplication of what? So far, we only have a fragmented force that does not delivered entirely. And I am speaking here on debt. Yes, the Common Framework, but it has a narrow approach. After the restructuring process ends, the problem of debt persists and these countries continue spending big amounts money on debt service. So there is no real debt burden reduction. And in the end, they are sacrificing the funding of important areas of sustainable development, such as health, education. So that’s why we need an independent space of arbiter for restructuring. What are the barriers that prevent us from moving forward in that direction, if the majority of countries will benefit from this?
I think there were two linked questions regarding austerity. There are options rather than austerity to navigate these high debt levels together with high sustainable development financing needs. We need debt relief. Last year, it was the Jubilee year. For some countries, it’s imperative to have debt cancellation. And we need a new approach to debt sustainability. In that regard, how do we measure that a country is sustainable on its debt, but it’s defaulting on fulfilling the human rights of its people? The focus is on guaranteeing the returns to creditors, rather than the core work of the state, to guarantee a highly quality of life for all its population, along with the climate issues.
On the Three-Pillar approach, Robert highlights blended finance. But in the end, it is only leveraging private investment with public money. And these private investments pursue yields and returns to capital, not only the social good. Debt swaps, in the end are not a solution, they are a false solution. They don’t address, for instance, climate needs. In the end, this approach is not responding to current needs at the level of the magnitude we need to reduce debt. I think we need to change the approach drastically to what countries really need in this very challenging current world.
Speaker from Brazil, fellow at the Organisation of American States: I would love to hear your thoughts on the General Assembly of the UN’s decision on slavery as the biggest crime against humanity. What are your thoughts?
Director general of Mexico Evalua: What are the positive incentives that the IMF can provide or should provide to countries like Mexico, that is not a poor country, it’s a medium income country. It has not been in credit with the IMF in many but still is a country that needs to go into reform, fiscal reform, but doesn’t. Model laws have been very common in the UN spectrum in different areas, and I would like to know if the IMF has a model law for responsibility, fiscal responsibility in the countries, updated to the modern challenges.
DMUN Foundation: We are a youth-led youth-serving organisation, trying to bring to the forefront of youth issues in monetary policy discussions. So, my question for you is there was a not a lot of emphasis on the fact that these issues are very urgent, and also the fact that young people are the ones that are going to be inheriting crisis? How are you thinking the intergenerational consequences of, of this conversation?
United Nations Human Settlement Program: One of the priorities for the Compromiso de Sevilla is to advance the role of local and regional governments. How do you see the potential to increase the participation of local and regional governments?
Zainab Shumail, Asia Pacific Forum on Women Law and Development: You began your presentation by saying that the IMF is not a development institute. If you could just elaborate what that means or is meant to imply, because I would understand that the preservation or the fulfillment of human rights is not a top of priority in policy prescriptions of the IMF. But the violations of human rights are nonetheless happening and there’s widespread documentation and evidence of that happening in the Global South. How does IMF place itself in terms of accountability, or in terms of just having a position on the outcomes of the policy prescriptions that come out? The fiscal capacity or the fiscal space of governments that we’re talking about, those governments have a social contract to their people and even if we’re not talking about indebted economies, even if we talk about the largest shareholders on the IMF board, um, those are also not standalone, neutral entities, they’re member states which are also bound by some degree or extent by international human rights law. In this landscape, how does IMF place itself? When you make a statement like that, is it supposed to just be taken as a card that can be pulled out at any point in the conversation to say its not a priority?
In terms of what you mentioned about having a complementary role to UN bodies, there is also a lot of literature by special procedures, mandate holders, on the preservation and performance of human rights when it comes to macroeconomic governance and also debt sustainability, restructuring or debt cancellation. When you talk about complementary roles, how do you place yourself in relation to guidelines or resolutions or literature that exists, which should ideally guide the workings of an institution like the IMF?
Robert: Sovereign debt restructuring mechanism is not a terrible idea. It’s mentioned in our FfD paper. It’s something that the IMF actually proposed in 2002. My sense is that there isn’t the support for it amongst the membership at the moment, but it’s not a terrible idea. It requires countries giving up sovereignty, which is difficult in the current environment. Different countries are in different situations. For some countries, debt reduction might be important. There isn’t a one size fits all, especially in this complicated environment with domestic debt. You start defaulting on your domestic debt. What does that do to your banks? In a world where non Paris Club creditors are the biggest official and private predators are enormous.
Fiscal TA (technical assistance) was a question in the context of Mexico. It’s a very important part of what we do helping countries to generate more resources so that they can address the needs of their citizens. Positive spiral of good spending builds trust and so people feel more comfortable having higher levels of taxation. Intergenerational is something that gets talked about in the UN context quite a lot, but debt sustainability is a critical part of that.
The IMF works on trying to help countries avoid getting into debt crises and have a sustainable fiscal position. All our technical assistance is medium-term financial planning. We think long-term when often governments are thinking no further than the next election. We do give technical assistance to local and regional governments. Obviously our relationship is with central governments, finance ministries and central banks, especially in big countries like India, where this is critically important.
Your question on complementarity and what does it imply when I say we’re not a development institution? I say we’ve got a narrow mandate, economic and financial stability, but I immediately say, but that’s critically important for helping countries achieve their development goals. So we may not be a development institution, but we’re a critical part of helping countries achieve their development goals, their human rights goals, their social justice goals. Often this is a matter of creating fiscal space. Creating fiscal space is exactly what the Three Pillar approach is trying to help countries especially the countries that are going to get hard hit by the current situation and the war in the Middle East, potentially tightening financial conditions or lower growth, therefore lower revenue. We’re very aware of the importance of fiscal space and the importance of looking at inequalities and looking at protecting the vulnerable when situations require fiscal consolidation. But we’ve got too much debt and that probably often means spending less and making sure you’re spending well.
Daniela: The population is aging and that will be an issue for Global South countries soon. It’s very important to take the intergenerational impacts into account but sometimes governments and institutions lose sight of these medium to long-term impacts. For instance, the debt sustainability framework has projections, but for a short period of time so the advice results from this analysis are like narrow and ignore sometimes social impacts also for young population. And yes, the situation for different countries is heterogeneous, but in the absence of a permanent framework for the restructuring, the result is that countries are delaying restructuring at all costs and starting when it’s too late. So the economic and social costs are higher.
Imenne: I particularly like the question on the UN vote on slavery and the role of the IMF. We need macroeconomic policy to serve human rights and reparations. And we don’t want our countries to handle more debt. This is not our objective. I think that IMF needs to rethink their mandate that all economic policies, all policies in the world should, should serve human rights, should serve people and the planet. What does economic stability mean if it’s harmful to human rights?
Emma: There actually is support for discussions to start on a sovereign debt workout mechanism from the majority of IMF members, just not the majority of vote shares in the IMF. That’s an important difference. Thank you so much for raising the intercontinental slave trade. I think it’s incredibly important because it tells you where the conversation is at outside the IMF. In the African Union, we’re talking about reparations. We’re talking about the slave trade. Because that, that dynamic is still incredibly relevant to today’s IMF World Bank governance systems. Despite all the evolutions of the organisations, despite all the quota and shareholding reviews, we are still in a position where an institution that is responsive to the Global North is shaping and often just deciding the macroeconomic policies of the Global South. That is still as true today as it was in like 1977. I would say time is up for the IMF to solve this by themselves. And that’s why, you know, we are asking the members of the UN to take control of the global financial architecture through the UNGA where they are in the majority. Where developing countries are in the majority and make full use of the systems and avenues there, not just to explore some thinking on BWI reforms but to actively start reshaping that architecture, shift some of the functions of the Fund and away from them. Because time’s up.
