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Bretton Woods Observer Winter 2022
A quarterly critical review of developments at the World Bank and IMF

Published by BRETTON WOODS PROJECT
Working with NGOs and researchers to monitor the World Bank and IMF

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1. World Bank and IMF influence casts shadow over South Africa’s Just
Energy Transition Partnership
2. Chad gets debt rescheduling, not relief, and is left dependent on
oil revenues
3. IMF quota review: Putting climate at the core of IMF governance
reform
Guest analysis by Andrés Arauz & Ivana Vasic-Lalovic, Center for
Economic and Policy Research
4. Debt overhang risks another lost decade and could derail progress
on poverty reduction and SDGs
5. New IMF gender strategy’s potential to catalyse change undermined
by austerity and problematic mission creep
6. Egypt reaches agreement for IMF programme, but proposals for debt
relief are still lacking
7. Unbalanced financial stimulus followed by fiscal austerity: When
will IMF learn from its mistakes?!
8. Bridgetown Initiative calls for new Global Climate Mitigation
Trust financed via Special Drawing Rights
Guest comment by Avinash Persaud, Special Envoy on Climate Finance to
Prime Minister Mottley of Barbados.
9. World Bank’s update on Paris alignment fizzles at COP27 as
countries demand MDBs evolve to face climate emergency
10. World Bank’s definition of ‘universal’ social protection -
another buzzword?
11. A new SDR allocation: Combatting deepening fragility concerns
12. IMF’s Independent Evaluation Office appoints new director and
releases 2023 work plan
13. UN letter of allegation outlines concerns about the impact of IMF
surcharge policy on human rights
14. Inside the Institutions: The World Bank’s approach to gender
mainstreaming

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INFRASTRUCTURE/analysis

World Bank and IMF influence casts shadow over South Africa’s Just
Energy Transition Partnership

SUMMARY
- South Africa JETP adopts Bank and Fund’s approach to privatisation
of power sector and plans large fossil gas investments
- World Bank’s support for problem-riddled Medupi coal power plant
leaves reputation in tatters with South African civil society
- IMF issues paper argues for weakening labour protections to improve
‘efficiency’ of green transition

On 4 November, South Africa launched a much anticipated investment
plan (IP) for its new Just Energy Transition Partnership (JETP). The
plan calls for over $86 billion (1.5 trillion South African rand) of
investment in the country’s energy transition over the next five
years, with two-thirds of this going to the electricity sector, in
order to begin replacing coal-fired power stations with other energy
sources.
Significantly, the policy reforms undertaken as a part of the JETP –
which seek to unbundle Eskom, South Africa’s much-criticised, state-
owned energy utility (see Update 70), and create a more privatised,
market-based electricity sector – bear the clear imprint of the World
Bank and IMF’s controversial approach to structural adjustment in the
power sector across the Global South in recent decades, raising fears
about the JETP leading to increased inequality.
The World Bank has been heavily involved in the South Africa’s energy
sector over the past decade, providing a $3.75 billion loan to Eskom
in 2010 that went primarily towards the construction of the 4800
megawatt (MW) Medupi coal-fired power plant (see Observer Spring 201
9), a problem-riddled project that South African civil society
organisations (CSOs) have repudiated as “odious debt” and demanded be
written off by the Bank.
The JETP IP emerged after yearlong negotiations with an international
partnership group (IPG) – including the UK, US, France, Germany and
the EU – which offered South Africa $8.5 billion in financing for the
initiative at the UNFCCC’s 26th Conference of Parties (COP26) in
Glasgow in November 2021 (see Observer Winter 2021). However, the IP
revealed that just 4 per cent of this finance ($330 million) will be
provided by the IPG in grants, with much of the other financing
provided as loans or guarantees. South Africa was the first emerging
economy to complete a JETP IP, but others are already in the works in
Indonesia and Vietnam, indicating that the South Africa JETP’s
financing model and policy reforms may be replicated in other
settings.
Bretton Woods Institutions’ power sector privatisation agenda
embedded in South Africa’s JETP raises questions about equity
The JETP’s proposed reforms conform to a power sector restructuring
agenda the Bank and Fund have promoted in the Global South since the
1990s, albeit with uneven success. Indeed, a 2020 World Bank research
publication, Rethinking Power Sector Reform in the Developing World,
noted the need for more pluralist approaches, noting that while the
Bank’s “power sector reform blueprint has demonstrated its ability to
deliver in certain country contexts, the results have been quite
disappointing in other settings,” raising questions about its
suitability for South Africa’s low-carbon transition.
The JETP IP notes a new electricity sector bill is forthcoming, which
will establish “an independent transmission company which will act as
the system and market operator. The legislative reform…will enable
the emergence of a competitive electricity market.” A policy reform
included in a $750 million World Bank development policy financing
loan to South Africa approved in January 2022 increased, “the 1 MW
limit for license exemption for new embedded generation (EG)…to 100
MW,” a reform designed to smooth the entry of private actors in South
Africa’s energy sector, including for renewable energy projects (see
Background, What is World Bank Development Policy Financing?).
In a meeting with South Africa’s finance minister on 5 November,
World Bank President David Malpass continued the Bank’s push for
structural reforms, “to promote transparency and competition into the
power market, encourage private investment into power generation, and
improve the financial viability of Eskom.”
There are fears that such reforms will further increase costs for
South African energy consumers. Professor Patrick Bond of the
University of Johannesburg noted that “in order to pay for Medupi and
two other [coal] plants, Eskom has raised the real price of
electricity by more than 620% since 2007. Eskom is also in the
process of privatising, and…its leadership aims to end cross-
subsidisation that assists low-income users.”
The IMF, meanwhile, advocated for weakening labour protections to
ease the country’s low-carbon transition in a January issues paper,
arguing, “Bold reforms of labor market institutions in the areas of
collective bargaining, employment protection legislation, and minimum
wage-setting would give firms greater workforce management ability
and boost employment opportunities for the inexperienced and the
young.” Given that the concept of a ‘just transition’ was originally
developed by labour unions, this advice runs counter to the ‘just’
dimensions of the JETP.
The Bank’s damaging legacy of support for fossil fuels in South
Africa: From Medupi to Richards Bay
In parallel to the JETP IP’s finalisation, the World Bank approved $4
97 million in financing in late October for the repurposing of South
Africa’s Komati coal power plant, which will include 150 MW of solar
power, 70 MW of wind power and 150 MW of battery storage. On the eve
of its investment in Komati, however, the Bank’s country office in
Johannesburg was the target of protests on 14 October, as part of a
global day of action against the Bank’s fossil fuel investments, with
South African CSOs demanding the Bank’s Medupi loan be cancelled.
Bond argued following the protests that writing off the Bank’s Medupi
loan to Eskom, “would dramatically reduce repayment pressure on the
utility’s $22 billion debt.” However, in October the South African
government instead announced plans to transfer two-thirds of Eskom’s
debt to its own balance sheet, according to the Financial Times.
The Bank approved financing for Medupi in part owing to a severe
energy crisis in South Africa, but the project was dogged by serious
problems from the start, including allegations of corruption by
Japanese contractor Hitachi (later substantiated) and chronic design
flaws, which have resulted in repeated delays, cost overruns of 45
per cent and frequent loss of generating capacity (see Observer
Spring 2019). The plant, initially due to be completed in 2015, was
only finished in 2021; it is not among those slated to be retired
under the JETP. A new World Bank Country Climate and Development
Report for South Africa, published on 8 November, is conspicuously
silent on Medupi’s woes.
David Hallowes of South African CSO groundWork said of the Bank’s
Medupi investment: “At the time we told them it was wrong: Wrong on
the choice of power
generation technologies, wrong in its assumptions on what and who the
power is for, wrong because of the massive social and environmental
externalities, and wrong because people would pay the price of
decisions taken without consulting them.”
In 2019, the International Finance Corporation (IFC), the Bank’s
private investment arm, provided $2 million to co-finance a
feasibility study for a liquefied natural gas terminal in Richards
Bay, South Africa. Bond wrote in reaction to the JETP on 12 November:
“At both Richards Bay and Komati, Eskom CEO Andre de Ruyter
repeatedly told the Bank and other JET-P partners he would ideally
find R85 [South African rand] billion for two new…gas generators with
4000MW capacity….[T]he JET-P inflow now frees up De Ruyter’s revenues
to pursue those plans.”
Indeed, South Africa’s IP includes a 3000 MW gas power plant at
Richards Bay in Eskom’s project pipeline – although the source of
financing for it remains unclear. While the IPG made clear that their
financing shouldn’t be used for fossil fuels, all eyes will be on the
World Bank, as it is yet to clarify its policy on future gas
investments (see Observer Winter 2021).
bit.ly/SouthAfricaJETP

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In this issue

- IMF quota review: Putting climate at the core of IMF governance
reform by Andrés Arauz & Ivana Vasic-Lalovic
- New IMF gender strategy’s potential to catalyse change undermined
by austerity and problematic mission creep
- Bridgetown Initiative calls for new Global Climate Mitigation Trust
financed via SDRs by Avinash Persaud
- World Bank’s update on Paris alignment fizzles at COP27 as
countries demand MDBs evolve to face climate emergency

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FINANCE/news

Chad gets debt rescheduling, not relief, and is left dependent on oil
revenues

Chad reached an agreement unlocking IMF finance to restructure its
debt on 11 November. However, the agreement has been criticised for
failing to reduce the country’s overall debt burden and increasing
its dependence on oil revenues. It is the first deal agreed under the
much-criticised Common Framework for Debt Treatments (see Observer
Winter 2021, Winter 2020) created by the G20 in 2020, which will
reschedule debt repayments due in 2024, ensuring Chad’s debt remains
under the level of ‘moderate risk of debt distress. An initial
agreement was made with bilateral creditors in 2021, but a final deal
was delayed by Swiss commodities trader Glencore Plc, which holds
approximately one-third of Chad’s nearly $3 billion external debt.
Tim Jones of UK-based civil society organisation Debt Justice noted
on Twitter, “Glencore has been rewarded for blocking debt relief for
Chad over the last two years.”
While the IMF welcomed the deal, World Bank President David Malpass
expressed concern, saying, “The agreement reached by the creditors
provides no immediate debt reduction. As a result, the debt service
burden of Chad remains heavy and is crowding out priority
expenditures on food, health, education and climate.” However, the
Bank has not supported broader calls for a UN debt restructuring
mechanism, or offered to cancel its own debts.
Glencore and bilateral creditors agreed Chad did not need debt relief
because high oil prices were boosting its revenues. If oil prices
fall, bilateral creditors said they could reconvene and offer help.
The deal also incentivises the maximisation of oil revenues when the
world should be transitioning away from carbon-intensive fuels and
countries at a time when the world and countries in the Global South
like Chad are especially vulnerable to the effects of and
increasingly suffering from climate change.
bit.ly/ChadDebt

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IFI GOVERNANCE/analysis

IMF quota review: Putting climate at the core of IMF governance
reform
Guest analysis by Andrés Arauz & Ivana Vasic-Lalovic, Center for
Economic and Policy Research

SUMMARY
- Addition of cumulative carbon emissions indicator in IMF quota
formula would give climate-vulnerable countries greater voice in IMF
- Decision-making powers at Fund currently tilted towards rich
countries, who are largest historical carbon emitters
- Equitable reform of IMF quotas essential to adapt global financial
architecture to tackle climate crisis

The climate crisis requires substantial mobilisation of international
financial resources. Yet a country’s power in the global financial
system is not tied to, and is in fact inversely related to, its share
of responsibility for the climate crisis. To give more decision-
making powers to countries most impacted by climate change and
incentivise all countries to cut emissions, we propose a necessary
update to the International Monetary Fund’s (IMF) quota formula by
adding a variable representing member states’ share of cumulative
(i.e. historical) carbon dioxide (CO22) emissions. The IMF is
currently undergoing its 16th General Review of Quotas, a process
that is scheduled to conclude by 15 December 2023 (Observer Autumn 20
22).
The largest global cumulative emitters of CO222 are also the most
powerful countries at the IMF in terms of voting shares. Advanced
economies – 36 high-income countries as categorised by the IMF – are
responsible for approximately 44 per cent of cumulative global CO222
emissions since 1944 (the year the IMF was founded), according to
data from the Potsdam Institute for Global Climate (PIK). They hold
approximately 59 per cent of votes at the IMF. The quota formula,
also used to determine a country’s voting power at the IMF, rewards
economic size, trade openness, and the accumulation of reserves (see
Inside the Institutions, IMF and World Bank decision-making and
governance), but ignores countries’ contributions to the climate
emergency. For the IMF to adequately provide climate financing
solutions, its governance structure needs to consider member
countries’ differentiated responsibility for, and vulnerability to,
the climate crisis. This is a missing aspect of the IMF staff’s
climate strategy (see Observer Autumn 2021).
As the Bridgetown Initiative proposed by Barbados Prime Minister Mia
Mottley in September makes clear, one of the most important, concrete
sources of debt-free and taxpayer-free climate financing is a new
issuance of Special Drawing Rights (see Background, What are Special
Drawing Rights (SDRs)?). Calls for a new $650 billion SDR allocation
have been backed by over 150 civil society organisations (see
Observer Autumn 2022). The issuance is a decision made by the IMF
Board of Governors. Furthermore, climate-linked SDRs would benefit
vulnerable countries of the Global South the most, but the voting
power needed to reach that decision rests with advanced economies of
the Global North. More precisely, the US exerted its veto power to
block, for over a year into the pandemic, the last issuance of SDRs
(see Observer Autumn 2021).
Terms of lending directly impact low- and middle-income nations’
fiscal ability to combat climate change, and their low voting power
prevents them from influencing how the IMF will incorporate climate-
related risks into its operations. From a fiscal perspective, higher
quotas would increase developing countries’ debt-free SDR financing
in a new allocation and would increase their access to
conditionality-free rapid emergency loans.
Integrating climate responsibility into IMF quota review
The distribution of voting power at the IMF begins with a “calculated
quota share” (CQS) determined by the IMF’s formula. However, the
“actual quota share” (AQS) is determined by complex negotiations
during a General Review of Quotas. The negotiations of the 14th
Review resulted in the US’s share still being above the veto
threshold of 15 per cent and a significant dilution of China’s share.
In a recent paper presented at the 2022 World Bank and IMF Annual
Meetings Civil Society Policy Forum (see Dispatch Annuals 2022), we
ran a simulation of IMF voting share recalculation with the addition
of a climate variable, representing cumulative CO222 emissions per
country from 1944 to 2019.
The inclusion of this climate variable would significantly reduce the
voting share of the greatest CO22 emitters and increase that of the
Global South. If we assume countries fully adopt our formula proposal
(i.e. without subsequent opaque negotiations), the major winners
would be 36 Small Island Developing States (SIDS): Their vote share
would increase from approximately 2.5 per cent currently to nearly 21
per cent — reflective of the need to increase their decision-making
power at the IMF given their vulnerability to climate change,
especially rising sea levels. The US share would decrease from 16.5
to 5.64 per cent, and China’s share from 6.1 to 5.36 per cent. Along
regional lines, 141 Global South countries would increase their vote
share from 37.0 to 56.4 per cent, and, in particular, 48 Sub-Saharan
African countries’ voting shares would expand from 4.9 to 9.0 per
cent. Twelve per cent of the 36 advanced economies’ votes would be
redistributed to 154 emerging and developing economies.
Our proposal for IMF governance reform would require the improbable
scenario where dominant state stakeholders concede large portions of
their current voting. However, we believe that “common but
differentiated responsibility” reforms are critical in our climate
emergency.
At the 2020 Annual Meetings of the IMF Board of Governors, IMF
Managing Director Kristalina Georgieva issued a call to action:
“Today we face a new Bretton Woods moment. Just as the pandemic has
shown that we can no longer ignore health precautions, we can no
longer afford to ignore climate change.…We focus on climate change
because it is macrocritical, posing profound threats to growth and
prosperity. It is also people-critical and planet-critical.”
As Bretton Woods institutions’ governance structures were necessary
for post-war reconstruction, today’s international financial and
monetary institutions must allow for new configurations of decision-
making organised around equitable climate action as an urgent
priority. If the climate emergency is to be taken seriously as a
“macrocritical” risk to the global economy, major change is urgently
needed in global economic governance. The IMF is the place to start.
bit.ly/IMFQuotaClimate

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FINANCE/news

Debt overhang risks another lost decade and could derail progress on
poverty reduction and SDGs

SUMMARY
- World Bank’s report notes pandemic has helped bring two decades of
progress on poverty reduction to a halt
- Over 60 per cent of low-income countries and 25 per cent of middle-
income economies are in or at risk of debt distress

Progress on eradicating extreme poverty in the Global South, already
declining since 2015 and significantly set back by the Covid-19
pandemic, is now further endangered by widespread debt distress. Both
the UN and World Bank are raising the alarm that the Sustainable
Development Goals (SDGs) are unlikely to be met without action on the
growing debt crisis.
The Trade and Development 2022 report by the United Nations
Conference on Trade and Development (UNCTAD) released in October
argued that difficult global economic conditions, a significant debt
overhang and the lack of an effective mechanism for debt relief could
make this another lost decade for development goals.
According to the World Bank’s 2022 Poverty and Shared Prosperity
report titled Correcting Course, the pandemic marks a grim turning
point, with an era of global income convergence giving way to
significant divergence. The report argues the pandemic produced the
first reversal of the reduction in poverty globally in more than two
decades, and noted that the world is now significantly behind on SDG
1.1 of eradicating extreme poverty by 2030.
Correcting course, but in which direction?
The after effects of the pandemic’s massive and asymmetric supply and
demand shocks have been compounded by the war in Ukraine. Further,
the IMF is supporting a broad turn towards austerity, which will see
government budgets squeezed for 85 per cent of the world’s population
in 2023 (see Observer Winter 2022, Autumn 2022, Summer 2022; Dispatch
Annuals 2022), which is likely to further hobble the recovery and
make the SDGs even more difficult to achieve.
Over 60 per cent of low-income countries and more than 25 per cent of
middle-income economies are in or at risk of debt distress, and are
in danger of being unable to fulfil their fiscal obligations. UNCTAD
warned  that this could end any prospect of the SDGs being realised
by the 2030 deadline.
While the pandemic has certainly worsened the outlook on eradicating
poverty outcomes, the current trends predate Covid-19, calling into
question the Bank’s approach to private-sector led development
financing. The Bank has acknowledged that the rate of reduction in
extreme poverty achieved between 2000 and 2015 had already slowed in
the five years before the pandemic, and has called for a “significant
course correction”.
Unfortunately, the current debt crisis afflicting the Global South is
more than a glitch in the system. It represents a recurring feature
of the international financial architecture over the last four
decades: An October 2020 letter signed by over 550 civil society
organisations calling for an urgent reform of the international debt
architecture described the ‘indebtedness’ of these countries as “both
a consequence of and a tool for domination” – with serious impacts on
development.
No shortage of alternatives
In its report, UNCTAD argued the SDGs are achievable, but only with
systemic action to address a systemic crisis.
Many proposals address particular aspects of the international
financial system that are driving negative development outcomes. The
Global Action for Debt Cancellation Movement is calling for the
unconditional cancellation of all external debt repayments, including
debt owed to the World Bank and IMF, and for national debt audits and
a fair and transparent UN framework for debt crisis resolution. A
September report by Matthew Cummings and Isabel Ortiz set out a range
of alternatives to the austerity paradigm that countries can pursue
to expand their fiscal space and prioritise social investments (see
Observer Winter 2022).
UNCTAD’s proposals are more far reaching, including addressing
underlying global supply side issues as an alternative to tightening
monetary policy to tamp down inflation, anti-trust and market
regulation to counter speculation, new rules for managing sovereign
debt crises and a new Bretton Woods to support equitable global
growth (see Observer Summer 2022). UNCTAD’s Richard Kozul-Wright and
Boston University’s Kevin P. Gallagher have also proposed the Geneva
Principles for a Global Green New Deal, at the heart of which is a
new values-driven multilateralism.
bit.ly/DebtAusterity

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GENDER/analysis

New IMF gender strategy’s potential to catalyse change undermined by
austerity and problematic mission creep

SUMMARY
- IMF adopted first ever strategy to mainstream gender across
surveillance, lending and capacity development in July
- While acknowledging harm can come from economic policy, strategy
lacks credible commitment to pivot from IMF’s own history of
exacerbating gender inequality
- Over 300 women’s rights and economic justice groups and advocates
reject strategy as “pinkwashing” and illegitimate “mission creep”

As the global economic outlook continued to worsen and the prospects
of an “inclusive recovery” to build a more equitable post-pandemic
economy faded, the IMF published its long-awaited Gender
Mainstreaming Strategy in July (see Observer Spring 2022, Summer 202
1). Following an online consultation in the spring and a prolonged
drafting period, the new strategy sets out the Fund’s vision to
“close gender gaps” to foster economic growth and stability across
its surveillance, lending and capacity building work. While efforts
were made to heed civil society organisations’ (CSOs) demands,
articulated in a joint statement among other inputs, the strategy
lacks a commitment to ensure its policies do not harm women and sees
the Fund assume unprecedented influence over countries’ gender
equality policies through loan conditionalities. As a result, over 30
0 women’s rights and economic justice groups and advocates openly
rejected the document in an October letter.
Bringing together widely different agendas was no easy task
The Fund’s press release and discussions with IMF staff indicate that
the strategy navigated a contentious terrain in its attempt to
reconcile widely differing perspectives on whether and how the IMF
should engage on gender. Conservative forces inside and outside the
institution would prefer it to stick to its limited monetary and
fiscal remit and are suspicious of expanded external collaboration.
Strong civil society voices similarly denounced the Fund’s legitimacy
and expertise to engage on gender, while providing extensive comments
to the consultation, stressing the focus must be on assessing
gendered impacts of IMF-promoted economic reforms and pursuing
alternative policies that “do no harm”, in line with the UN Guiding
Principles and states’ human rights obligations (see Observer Spring
2022, Spring 2019).
In a Civil Society Policy Forum event at the IMF and World Bank
Annual Meetings in October, the IMF’s Senior Gender Advisor Ratna
Sahay emphasised that her team worked hard to take on board key asks
from civil society, such as mainstreaming gender rather than
pigeonholing the topic, acknowledging that economic policies can
exacerbate gender inequality and that greater focus should be put on
the social and distributional consequences of adjustment policies and
the “quality” of growth. The strategy also included a stand-alone
pillar on collaboration with external experts including academia, UN
Women and CSOs, directly building on civil society demands. Yet,
challenges about the lack of deeper consultation with critical
women’s rights groups and missing reflections of historical harms
through IMF policies were not well received by Fund staff at the
event, indicating a lingering unwillingness to acknowledge these
harms and an expectation gap about the nature of meaningful
consultation processes.
Questioning austerity framework remains a ‘non-starter’, proposed
mitigation efforts are band-aid solutions
To the frustration of CSOs, the strategy does not explicitly
recognise and address the scale of the gendered impact of core IMF
macroeconomic advice, in particular when it comes to ever-expanding
austerity, which remains “off the table” in discussions with the Fund
despite overwhelming evidence that it harms women (see Briefing, The
IMF and Gender Equality: A Compendium of Feminist Macroeconomic
Critiques). The consistent focus on “gender gaps” for the purpose of
growth rather than transformative approaches aiming at an economy
that fosters equality and wellbeing, and the suggestion of narrowly
targeted mitigation measures to cushion universal negative impacts,
cast considerable doubt on the willingness of the IMF to seriously
investigate and rectify its own historic exacerbation of gender
inequality (see Briefing, The IMF and Gender Equality:
Operationalising Change).
“Rather than prevent negative gendered impacts by following
alternative policies, as the IMF’s 2018 guidance note on
operationalising gender recommended, the focus is now squarely on
compensatory measures,” wrote Roos Saalbrink of ActionAid
International in The Care Contradiction: The IMF, Gender and
Austerity, published in October. “Targeted social protection schemes
are in contradiction to the commitments to social protection floors
made by countries, the United Nations and in the SDGs.” While the IMF
– despite being a specialised UN agency – has long rejected that
human rights frameworks directly apply to its mandate, positioning
the Fund in relation to these frameworks would be necessary to
develop “credible reference points for understanding or taking action
on substantive gender gaps,” Saalbrink argued.
Care is a prime example. Although the strategy mentions women’s
unpaid care work as a driver of inequality, it fails to draw the
connection to women absorbing the shock of shrinking public services
and social investment over recent decades. Clearly, “stability and
growth” take precedence over safeguarding women’s rights in IMF
policy advice and conditionality, without a deeper reflection on how
the globalised, growth-based economic model itself has entrenched
gender inequality and the climate crisis. “It is critically
problematic to instrumentalise women’s labour force participation and
gender gaps as ‘macro-critical’, in the context of the Fund’s decades
long history of policy paradigms that have generated structural
gender inequalities, such as fiscal consolidation, labor
flexibilization, financial liberalization and the privatization of
state-owned enterprises,” emphasised Bhumika Muchhala of Malaysia-
based CSO Third World Network.
Civil society calls out IMF’s lack of legitimacy and expertise on
gender
Another contentious point is the strategy’s inclusion of gender
conditionality, in which Fund staff plan to impose gender-related
targets in loan programmes, the negotiations of which are highly
opaque and often lack democratic scrutiny or involvement of women’s
rights organisations. Not only does this build on a neo-colonial
history of IMF-imposed structural adjustment, which has had
devastating impacts on women’s rights in the Global South, but it
also threatens to usurp the normative space of intergovernmental
expert bodies with a mandate on gender, such as the United Nations
Committee on the Elimination of Discrimination against Women (CEDAW),
as well as to eclipse the demands of countries’ own women’s rights
movements. Over 300 CSOs and individuals publicly rejected the
strategy as illegitimate “mission creep” and “commodification of the
gender equality agenda”, with Veronica Serafini of Peru-based CSO
Latindadd calling it “a pink-washing programme that promotes an ever-
expanding encroachment [by the IMF] into the policy space and
economic sovereignty of developing countries” in the accompanying
press release. “We…question the [IMF’s] expertise, [and its]
technical and... ethical standing to advise in matters of gender
equality and women’s and girls’ human rights,” added feminist
activist Emilia Reyes, of Mexico-based CSO Equidad, in the same
release.
While the gender strategy clearly opens doors for the IMF to better
understand the impacts of its economics policies on women and to
steer the Fund towards more informed decision-making, civil society
and UN independent experts – in both reports and letters – have made
clear that resulting changes will only contribute to women’s decent
work, agency, and economic empowerment if they are accompanied by a
willingness to challenge the IMF’s own long-standing institutional
bias towards fiscal consolidation and its fixation on growth, and to
pivot towards building an enabling environment for an economy based
on care and wellbeing.
bit.ly/IMFMissionCreep

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FINANCE/news

Egypt reaches agreement for IMF programme, but proposals for debt
relief are still lacking

The IMF reached a staff-level agreement with Egypt for a 46-month
Extended Fund Facility (EFF) Arrangement of $3 billion on 27 October.
Egypt has also requested an additional $1 billion from the IMF’s
Resilience and Sustainability Trust. While the EFF programme notes
that the agreement’s goals are aimed at safeguarding macroeconomic
stability and debt sustainability, long-term solutions to the
country’s debt problems are nowhere to be found. The agreement is
still pending the IMF board’s approval, which will be discussed at
the board’s meeting on 16 December, according to its official
calendar.
Since 2016, Egypt has had to repeatedly return to the IMF for
financial support, raising questions about the effectiveness of the
Fund’s policy prescriptions. A 2019 report by Oxfam International
found that IMF programmes in the country have “contributed to a
decrease in social spending and an increase in poverty” (see Observer
Winter 2019, Summer 2018; At Issue February 2017).
Since President Abdel Fattah El-Sisi took office in 2014, Egypt’s
external debt has rapidly increased – especially given the
government’s reliance on heavy borrowing. In June, its external debt
stood at $155 billion, with $52 billion owed to multilateral
institutions, of which 44.7 per cent is owed to the IMF, according to
the Central Bank of Egypt.
Tim Jones, of UK-based civil society organisation Debt Justice, said,
“The IMF loan will just be used to pay previous lenders, while
keeping Egypt trapped in a debt crisis. The IMF is making the same
mistakes as in the 1980s and 1990s, bailing out reckless lenders such
as private bondholders. This ensures the debt crisis will continue,
while incentivising lenders to keep acting recklessly in the future.”
Other highly indebted middle- and low-income countries, including
Mauritania, Tunisia and Chad (see Observer Winter 2022), are
currently negotiating loan programmes with the IMF.
bit.ly/EgyptEFF

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CONDITIONALITY/news

Unbalanced financial stimulus followed by fiscal austerity: When will
IMF learn from its mistakes?!

SUMMARY
- In 2021, over 134 countries contracted their budget by 3.5 per cent
of GDP. By next year, 85 per cent of the world’s population will live
under austerity measures
- As a result of the inadequate crisis response, it is expected that
between 75 and 95 million more people will fall into poverty in
comparison to pre-Covid-19 levels

Following a decade of austerity after the global financial crisis,
the world is heading yet again into another economic recession. Since
2008, both the financial crisis and the Covid-19 pandemic have led to
short periods of fiscal expansion, followed by long periods of
socially painful fiscal austerity, particularly promoted by IMF
through its conditional lending programmes. A report by Isabel Ortiz
and Mathew Cummins published in September warned that the dangers of
the post-pandemic austerity shock are far more severe this time.
Their analysis indicates that in 2021, 134 countries contracted their
budgets by 3.5 per cent of GDP, compared to 2.4 per cent in the
period following the 2008 financial crisis.
This public spending contraction comes on top of unequal Covid-19
stimulus spending across the globe. A report by Financial
Transparency Coalition published in September, highlighted that
countries in the Global South provided stimulus measures equivalent
to 2.4 per cent of their GDP during 2020-21 compared to an average of
28.4 per cent of GDP in high-income countries. Moreover, the report
found that stimulus packages primarily benefited the corporate
sector, with approximately 40 per cent of the recovery funds being
directed towards large companies. As a result of this inadequate
crisis response, both in size and composition of fiscal spending, it
is expected that between 75 and 95 million more people will fall into
poverty in comparison to pre-Covid-19 levels.
The crisis is far from over, with more hardship on the horizon
Ortiz and Cummins’ report, issued as part of a newly launched
#EndAusterity Campaign comprised of 500 civil society organisations
(CSOs), highlighted that by next year, 85 per cent of the world’s
population will live under austerity measures. The intensifying drive
toward austerity is worrisome as measures are implemented during new
surges of Covid-19, inflationary pressures, and food insecurity
exacerbated by the Russian war (see Dispatch Annuals 2022; Observer
Summer 2022). The most common policies promoted by the IMF involve
rationalising social protection programmes; cutting public sector
wages and reforming labour laws; reducing subsidies on basic goods as
prices hit record highs; and privatising public services resulting in
layoffs. The Fund’s failure to support a genuine recovery contradicts
statements made by the IMF’s managing director in April about the
crisis being an opportunity to “craft a different and better future
together.”
The negative social and economic impacts of austerity are well
documented, including by the IMF itself.  Academics and CSOs have
also recorded its adverse impacts on poverty, inequality, human
rights as well as on jobs and economic activity (see Observer Autumn
2020). Short term, austerity depresses incomes and domestic demand.
In the long term, unemployment, and excess capacity harm economic
activity undermining recovery efforts. Then why is IMF still
promoting fiscal consolidation? The intent is to ensure debt
sustainability so that countries with IMF programmes can carry out
timely loan repayments to their creditors, even to the detriment of
citizen welfare – an artificially created trade-off.
While the IMF often argues that austerity cuts are unavoidable, Ortiz
and Cummins stress that austerity alternatives exist. Increasing tax
revenues can be done through taxing corporate profits, financial
activities, and wealth. Restructuring existing debt should be
possible if the legitimacy of the debt is questionable or the
opportunity cost in terms of worsening deprivations of the population
is high. Eradicating illicit financial flows and reallocating public
expenditure from high-cost low impact investments like defence to
those with larger social impacts are alternatives to tackle
corruption and the mismanagement of public funds.
At a time of austerity and crisis, the need to create fiscal space
has never been greater. Ortiz and Cummins highlight that “crises
oblige countries to rethink policies, and the COVID-19 pandemic is an
opportunity to create a new social contract, to prioritize human
rights, sustainable development, and political stability, to achieve
long-term prosperity for all.”
bit.ly/FiscalAusterityIMF

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ENVIRONMENT/commentary

Bridgetown Initiative calls for new Global Climate Mitigation Trust
financed via Special Drawing Rights
Guest comment by Avinash Persaud, Special Envoy on Climate Finance to
Prime Minister Mottley of Barbados

SUMMARY
- IMF members hold $12.7 trillion of central bank reserves and $943
billion worth of SDRs, half of which are held by developed countries
who do not need them
- Bridgeton Initiative proposes a Global Climate Mitigation Trust
backed by $500 billion in SDRs for climate and development

Isaiah Berlin divided up the world into hedgehogs and foxes, where “a
fox knows many things, but a hedgehog knows one big thing.” In the
climate debate there are plenty of foxes trying to be hedgehogs. The
most common “othering” is the idea that large developing country
emitters like China and India don’t understand the science, or care;
or they don’t understand the economics, or must be in hock to
powerful local coal interests, or foreign oil and gas interests or a
multitude of other unforgivables. The UNFCCC’s 27th Conference of
Parties (COP27) in Egypt was not successful, the foxes-trying-to-be-
hedgehogs say, because industrialising developing countries did not
raise their commitment to reducing greenhouse gas emissions.
More ambitious but unfunded commitments (see Observer Winter 2021)
will get us nowhere fast. Switching to renewables is capital
intensive and the cost of capital in low- and middle-income countries
(LMICs) is prohibitive. Before the US Federal Reserve started raising
interest rates, the average cost of capital for a solar photovoltaic
project was 3 per cent in Europe according to the International
Energy Agency, and 12.5 per cent in Brazil. That gap is wider now. We
need over $1 trillion of transition projects a year for LMICs,
excluding China, according to a November 2022 report by the
Independent High-Level Expert Group on Climate Finance. Few would be
commercially viable with that cost of capital. We can sell ‘risk
mitigation’ foxy financiers yell, but the hedgehog retorts that they
can’t mitigate the risks that follow from the way the international
financial system works.
In a crisis, the demand for international reserve currencies, like US
dollars, euros and yen grows. This enables issuer countries to
respond to the crisis with activist fiscal and monetary policies,
limiting social and economic risks. It is why Japan, Italy and
Greece, having much higher debt-to-GDP ratios than most LMICs, spent
far more on Covid-19 relief, and still have lower borrowing costs
than all of them (see Observer Autumn 2022). Elsewhere, the crisis
has reduced the demand for currencies, forcing governments to cut
spending and raise interest rates, fuelling social and economic
disruption (see Observer Winter 2022). Offers of a few grants and
project risk insurance don’t offset that risk for private investors.
But if LMICs governments have to finance the transition themselves,
they will sink into oceans of debt long before the seas swallow them
up (see Observer Summer 2022).
Addressing the scale of the transition challenge
The ‘Bridgetown Initiative’ proposed by Barbados Prime Minister Mia
Mottley seeks to break the deadlock over climate finance by using the
power of international reserve currencies in the form of the IMF’s
Special Drawing Rights (SDRs) to drive private investment
into transition projects in LMICs at no direct cost to rich and poor
country taxpayers (see Inside the Institutions, What are Special
Drawing Rights (SDRs)?). There is high theology around SDRs but
simply, the IMF issues SDRs to member countries relative to their
economic size (i.e. their IMF quota share; see Observer Winter 2022,
Autumn 2022). SDRs give holders the right to borrow from other IMF
members via the SDR basket of currencies at low rates – currently 2.7
per cent.
Alongside existing SDR-funded IMF trusts, such as the Poverty
Reduction and Growth Trust and the Resilience and Sustainability
Trust (see Observer Summer 2022), ‘Bridgetown’ proposes a Global
Climate Mitigation Trust that can hold $500 billion of unused or new
SDRs. Using the SDRs as collateral, the Trust borrows the underlying
currencies in the SDR basket and on-lends this cash to projects in
LMICs in return for shares in the projects. Lending directly to
projects instead of governments would be the main difference from
other existing IMF trusts. These loans would become an asset of the
Mitigation Trust and a liability of the project, effectively taking
climate mitigation out of the balance sheets of LMICs and
meaningfully involving the private sector – an essential component
considering the lack of fiscal space and the high cost of capital in
LMICs. The projects would have to pre-qualify using proven
technologies, high environmental, social and governance standards and
would be chosen by expert investment managers based on how much and
fast they credibly reduce global warming. Moreover, the Trust would
work in close coordination with national governments, to ensure that
projects that received financing were firmly embedded in national
climate plans and green industrial strategies, with a view to
fostering ‘developmental’ private climate finance flows (see Observer
Autumn 2022). It is projected that the Trust’s equity would draw $3-4
trillion of private savings into these projects. Following an initial
review, the Trust could be expanded with small but regular future
allocations of SDRs.
Achieving the energy transition will create a $78 trillion global net
gain, according to the IMF. Some of this value will be captured by
the Trust’s investments, allowing it to return SDRs over time. The
risks can be managed, preserving the SDRs’ reserve asset status.
Funding in a basket-currency reduces exchange rate risks; charging an
upfront fee provides loss-absorbing capital and losses could be
spread across other equity investors. Because the SDRs are backed by
a diversified portfolio of investments with returns based often on
strong power-purchase agreements, this is no more inflationary than
using any other funding instrument. This plan bets on the success of
a transition that we have no choice but to complete. Currently, this
is the only plan close to addressing the scale of the problem. What
is the point of reserves if we don’t use them in a crisis?
bit.ly/BridgetownInitiative

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ENVIRONMENT/news

World Bank’s update on Paris alignment fizzles at COP27 as countries
demand MDBs evolve to face climate emergency

SUMMARY
- Bank’s approach to aligning development policy financing and IFC’s
indirect lending remains opaque
- Despite pledge to publish all aspects of its Paris alignment
approach by 2023 Spring Meetings, Bank is yet to commit to public
consultation

The World Bank’s approach to aligning with the Paris Agreement
remains blanketed in uncertainty, after the Bank and other
multilateral development banks (MDBs) gave a top-line update on their
joint approach to Paris alignment at the United Nations Framework
Convention on Climate Change’s (UNFCCC) 27th Conference of Parties
(COP27) in Sharm El-Sheikh, Egypt, on 9 November.
The event provided new details on two tracts of the MDBs’ Paris
alignment approach where little information has thus far been made
public: The alignment of policy-based lending - or development policy
financing [DPF], as it’s known at the World Bank (see Background,
What is Development Policy Financing?) - and of lending via
counterparties, or financial intermediaries, which constitutes about
half of the portfolio of the International Finance Corporation (IFC),
the Bank’s private investment arm.
Worryingly, major questions remain about both approaches. The
presentation suggested policy reforms linked to DPF would be
considered ‘aligned’ if they do not present “persistent barriers” to
efforts to reduce greenhouse gas emissions – a principle which would
seem to leave the door open for short-to-medium term support for
carbon-intensive activities, despite the urgent need to reduce
emissions. For financial intermediary lending, in cases where MDBs
make equity investments, clients will be required to have a ‘credible
decarbonisation plan’, but it remains to be seen how robust these
will be. IFC’s Green Equity Approach currently only requires clients
to divest from coal by 2030, and includes no restrictions on
financing for oil and gas, per research by Netherlands-based civil
society organisation Recourse (see Observer Winter 2020).
“The MDBs’ Paris Agreement alignment update…demonstrated that the
process is too sluggish for the scale of change needed to stop
catastrophic climate change,” said Fran Witt of Recourse, in a press
release from the Big Shift Global coalition on 9 November. “It
appears that for development policy finance and intermediated finance
the process has hardly started to get off the ground.”
At a separate World Bank COP27 side event on 11 November, the Bank
clarified that it would publish all aspects of its Paris alignment
approach ahead of the 2023 World Bank Spring Meetings. The Bank is
due to operationalise its approach from 1 July 2023, with the
exception of 15 per cent of the portfolios of IFC and the
Multilateral Investment Guarantee Agency (MIGA), the Bank’s insurance
arm, deemed ‘hard to decarbonise’ (see Observer Summer 2021).
Despite the process being heralded by Bank staff as critical to the
Bank’s efforts to ensure climate is mainstreamed across all its work
(see Dispatch Annuals 2022), the Bank is yet to commit to holding a
public consultation period on its Paris alignment approach.
Bank faces growing calls to reform to address climate and other
crises
The Bank’s slow progress on Paris alignment occurred alongside
growing calls for it to evolve in order to address current global
challenges.
In her address at COP27 on 7 November, Barbados Prime Minister Mia
Mottley
excoriated the Bank, asking “is that called the International Bank
for Reconstruction and Development only for the 20th century?” The
final decision text at COP27, meanwhile, called on “multilateral
development banks to define a new vision and commensurate operational
model…fit for the purpose of adequately addressing the global climate
emergency, including deploying a full suite of instruments, from
grants to guarantees…, taking into account debt burdens.”
The Bank and its embattled President, David Malpass – who has
repeatedly denied he’s a climate denier after facing calls to resign
when he refused to confirm that he accepted climate science at an
event in September (see Dispatch Annuals 2022) – are due to respond
to a request from World Bank shareholders, including G7 countries,
for a draft ‘evolution roadmap’ before the end of the year, per
reporting by Devex on 14 November. How the Bank will ramp up its
climate work is expected to be a central focus of the roadmap, with
the Bank’s Managing Director of Operations Axel van Trotsenburg
strongly hinting at COP27 that this could include a request for a
‘green’ capital increase from shareholders, according to Reuters.
bit.ly/WBGParisAlignment

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RIGHTS/news

World Bank’s definition of ‘universal’ social protection - another
buzzword?

SUMMARY
- World Bank’s newly released Social Protection and Jobs Compass
guidance note creates confusion over Bank’s definition of ‘universal’
social protection (USP)
- Experts highlight once again the incompatibility of targeted
approaches with USP

The Covid-19 pandemic and its related shocks have revealed the value
of public services and social protection floors. Institutions tasked
with ending poverty like the World Bank are increasingly under
pressure to support vital public services and play a key role in
wider universal social protection (USP) discussions. The World Bank
recently released its latest commitment to social protection: A
Social Protection and Jobs Compass to “chart a course towards USP,”
which provides guidance to Bank staff on jobs and social protection
issues.
Following a limited consultation process, civil society were eager to
respond to the Compass. Lena Simet of Human Rights Watch concluded
that the Compass guidance note, “makes a strong commitment to USP.
However, its guidance on how countries can get there is problematic.”
The Bretton Woods Institutions (BWIs) have long been challenged on
their claims of being pro-poor in their approach to social
protection. A wealth of evidence has highlighted the flaws of the
targeted approaches to social protection preferred by the BWIs, such
as Conditional Cash Transfers (CCTs), which have been shown to be
ineffective at reaching the poorest – as the Bank itself acknowledged
– prone to corruption, and less likely to protect human rights than
universal schemes.
The International Trade Union Congress released a statement citing
“considerable reservations”, about the Compass as it “prioritise[s]
the extension of targeted, non-contributory social assistance at the
expense of social security, especially pensions.” The Global
Coalition for Social Protection Floors (GCSPF) also responded,
echoing concerns about the Bank’s ‘universal’ approach, citing
incompatibility with the Bank’s focus on privatised and voluntary
schemes, and a “lack of references and alignment with human rights
and international labour standards,” such as social security minimum
standards of the International Labour Organisation (ILO) Convention 1
02 and Recommendation 202. GCSPF also highlighted that both private
finance and voluntary private schemes, which rely on individuals to
have savings and often are inaccessible to informal workers, are
considered by the Bank to be alternatives to public social security.
The Bank’s preference for privately schemes and targeted systems,
which are methods to define eligibility for programmes between the
poor, not only “fail to cover the majority of the population but also
fail to reach the people living in dire situations, [it] also
prevents States from developing their own social protection systems,”
noted a September report by civil society organisations (CSOs) Action
Against Hunger, Development Pathways and Act Church of Sweden titled,
Can a leopard change it’s spots?.
Dr Laura Alfers, of global network Women in Informal Employment:
Globalizing and Organising (WIEGO) commented: “We welcome the
commitment by the World Bank to Universal Social Protection. As
informal workers remain largely excluded from social protection, it
is encouraging that efforts to extend coverage to the ‘missing
majority’ are central to the World Bank’s new strategy. However, we
disagree with the promotion of voluntary savings schemes, which are
presented as central tools to expand coverage to informal workers,
and as ‘alternatives’ rather than complements to public social
security. Instead of simply dismissing public social insurance and
potentially creating costly parallel structures, we call on the World
Bank to support countries in adapting their social security
systems to be more inclusive.”
‘Universal’ support, with a side of austerity
The World Bank’s influence over countries’ social protection spaces
is significant; it describes itself as the largest funder of social
protection, citing a portfolio of $29.5 billion across 71 countries.
The Bank commits to the Global Partnership for Universal Social
Protection to Achieve the Sustainable Development Goals (USP2030), a
mission to achieve Sustainable Development Goal (SDG) 1.3.” Further
to this, the Bank entered a global partnership with the ILO on
achieving universal social protection in 2016.
USP2030 defines USP as “nationally defined system[s] of policies and
programmes that provide equitable access to all people and protect
them throughout their lives against poverty and risks to their
livelihoods and well-being,” which can consist of “cash or in-kind
benefits, contributory or non-contributory schemes, and programmes to
enhance human capital, productive assets, and access to
jobs…benefits/support for people of working age in case of maternity,
disability, work injury or for those without jobs; and pensions for
all older persons.” USP2030 also defines universal social protection
as a human right.
UK-based CSO Development Pathways found that the BWIs not only do
harm by prioritising poverty targeting, but have actively advocated
for removing universal systems created by governments (see Observer
Spring 2018). Both institutions tend to attach austerity-driven loan
conditionalities focused on shrinking fiscal space and cutting public
sector wage bills (see Observer Winter 2019), and national social
protection systems are often the target of such cuts.
bit.ly/WBSocialProtection

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RIGHTS/news

A new SDR allocation: Combatting deepening fragility concerns

SUMMARY
- Political unrest, fragility, conflict and violence rise amidst
worsening economic outlook and climate crisis
- New SDR allocation would support IMF and World Bank fragility
strategies and G7 commitment to addressing link between the climate
crisis and security

While over 150 civil society organisations have joined the UN
Conference on Trade and Development and Barbados’ Prime Minister Mia
Mottley in calling for a new $650 billion general allocation of
Special Drawing Rights (SDRs; see Inside the Institutions, What are
Special Drawing Rights?) to support climate action and pandemic
recovery, little attention has been devoted to the proposal’s
potential contribution to the prevention of violent conflict. Given
the costs of social unrest and political instability, particularly in
economically important middle-income countries, a new SDR allocation
would strongly contribute to global conflict prevention efforts and
to the IMF’s mandate to ensure global financial stability, as it
would enable debt distressed and fiscally constrained states to act
to forestall increasing discontent with, among other things, rising
food and energy crises by increasing or maintaing social protection
spending.
In February, the IMF released its long-awaited Strategy for Fragile
and Conflict-affected States (see Observer Autumn 2022, Summer 2018).
The strategy highlights that, “Supporting fragile and conflict-
affected states (FCS) is an important priority on the international
policy agenda,” and stresses that, “The economic impact of the COVID-
19 pandemic has been most severe in FCS…Debt and inflationary
pressures have also mounted. FCS are at a significant risk of falling
behind in their post-pandemic recovery [and] achieving the
Sustainable Development Goals.” Reflecting the importance of the
topic in the international agenda, the launch of the IMF’s FCS
strategy followed the February 2020 release of the World Bank’s 2020-
2025 Fragility Conflict and Violence (FCV) strategy, which was
informed by the joint United Nations and World Bank 2018 Pathways to
Peace report.
All three reports underscore constrained state capacity and
legitimacy as potential root causes of fragility and violence. Both
the World Bank and IMF strategies also stress the links between
climate change and fragility, with the Fund emphasising that “most of
the bottom 35 countries ranked according to their vulnerability to
climate change and readiness to improve resilience are FCS.” The
IMF’s strategy adds that, “Women and girls face specific and
heightened vulnerabilities in FCS contexts, deepening fragility.”
Taking into account these diverse and interlinked factors, the
document reflects the IMF board of directors’ agreement with the
strategy’s assertion that “the implications of fragility and conflict
are macro-critical and relevant to the Fund’s mandate—both in terms
of the long-run economic impact on members, but also because
spillovers originating in FCS can undermine macroeconomic stability
and growth prospects in neighbouring countries and regions.”
Worsening economic outlook and inequality crisis exacerbate fragility
and instability risks
In May, an IMF assessment of global social unrest trends made clear
that increased protests and social instability trends have once again
gathered pace after a decline during the pandemic, driven by curbs on
mobility and mass gatherings. The assessment noted that while the
causes of social unrest are complex, “steep price increases for food
and fuel have been associated with more frequent protests in the
past,” adding that, “any rise in social unrest could pose a risk to
the global
economy’s recovery, as it can have a lasting impact on economic
performance.”
The IMF’s concerns are shared by political risk consultancy Verisk
Maplecroft, whose June report stressed that “middle-income countries
will bear the brunt of social discontent” arising from the current
economic conditions. Additionally, a 2018 paper by Patricia Justino
and Bruno Martorano found that, “Welfare spending led to reductions
in conflict in Latin America between 1970 and 2010”, and that
“increasing state capacity to provide social welfare programmes may
improve political stability.”
Oxfam’s November blog was clear about the consequences of the debt
crisis on states’ capacity to meet the needs and expectations of
their citizens, highlighting that “three-quarters of all countries
globally are planning further [social spending] cuts totalling US$7.8
trillion dollars.”
In light of the current trends, a new SDR allocation would support
the conflict prevention strategies and goals of key IMF shareholders
such as the US and European Union states. A new SDR allocation would
likewise support the African Union’s Agenda 2063 Aspiration 4, a
peaceful and secure Africa, and the G7’s efforts to mitigate the
“threat [the] climate change and biodiversity crises pose…to
international peace and stability.”
bit.ly/FragilitySDRs

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IFI GOVERNANCE/news

IMF’s Independent Evaluation Office appoints new director and
releases 2023 work plan

On 18 October 2022, the board of the International Monetary Fund (IMF
) announced the appointment of a new Director of the Independent
Evaluation Office (IEO), Pablo Moreno, who will succeed Charles
Collyns when his term expires on 30 April 2023. Moreno is a Spanish
citizen currently serving as IMF executive director representing
Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Mexico and
Spain, a position he has held since November 2020. A change in
leadership has also been announced at the World Bank’s Independent
Evaluation Group (IEG), with Alison Evans leaving the Director
General position after four years, although no successor has been
announced yet.
Further to this, the IMF IEO published its 2023 work plan introducing
two new evaluations alongside its ongoing review of the IMF’s
emergency response to the Covid-19 pandemic: A full-scale Exceptional
Access Policy (EAP) evaluation and a shorter Applying the IMF’s
Mandate evaluation.
The EAP evaluation – a framework under which the Fund can provide
large-scale financial support to its members – will focus on
reviewing the EA criteria and assess risk mitigation processes
associated with large IMF lending. The IMF mandate evaluation comes
in a context where the Fund’s agenda has broadened substantially over
the past decade, including topics that were previously assessed to be
macro-critical but outside the Fund’s existing core of expertise,
such as gender (see Observer Spring 2022) and climate (see Observer
Autumn 2021). The evaluation will explore the governance surrounding
the process for broadening the Fund’s work programme, the role of
stakeholders, the trade-offs between new and existing work and
resource adequacy for undertaking activities beyond the IMF core
expertise.
bit.ly/IEOChanges

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FINANCE/news

UN letter of allegation outlines concerns about the impact of IMF
surcharge policy on human rights

On 26 August, nine UN Independent Experts and Special Rapporteurs
sent a letter to the IMF managing director expressing concerns “with
the impact of the surcharge policy on the enjoyment of the human
rights in affected countries.” The letter was sent under the Special
Procedures of the UN Human Rights Council.
The IMF has to date deemed the communication unworthy of a response.
A group of 350 civil society organisations (CSO) and experts sent a
follow-up letter on 22 November calling on the IMF board to guarantee
a response and address the contradiction between “its stated support
for a just transition and its actions.”
This letter was part of a wider CSO campaign aimed at ending IMF’s
surcharge policy, which – in line with what the IMF and World Bank
Annual Meetings 2022 G24 communiqué stated (see Dispatch Annuals 202
2) – has proven to be counter-productive, unfair, unnecessary and in
contravention of international human rights law (see Observer Spring
2022). This is especially true in the current context where an
increasing number of climate-vulnerable countries may resort to the
Fund for help to recover from climate disasters.
Former UN Independent Expert on Debt and Human Rights Juan Pablo
Bohoslavsky noted that, “The IMF has the obligation to respond to the
requirements of mandate holders since it is part of the United
Nations system…. You cannot afford not to answer if the questions you
are asked are difficult to answer, as would be the request to justify
surcharges.”
Argentina and Barbados are already calling for a review of the
policy, and the November G20 Indonesia statement also voiced support
towards continuing “the discussion of the IMF surcharge policy.”
bit.ly/SurchargesUN

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GENDER/background

Inside the Institutions: The World Bank’s approach to gender
mainstreaming

This Inside the Institutions looks at the World Bank’s current
approach to gender mainstreaming, reflecting on and comparing it to
previous approaches to the Bank’s commitment to addressing gender
inequality.
The article reflects on past iterations of the Bank’s decades-long
focus on gender and considers the wealth of programmes, reports and
strategies the Bank now uses to guide its approach to gender
mainstreaming. It also critically reflects on the impacts of the
Bank’s private sector driven development model on gender inequality.
bit.ly/WBGenderInside

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ISSN 2053-7522
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