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Bretton Woods Observer Spring 2025
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. Civil society calls for FfD4 to revive ‘spirit of Monterrey’ and
reassert UN’s role in global economic governance
2. IFC ends investment in waste-to-energy incineration projects in
Gujarat, India, following civil society campaign
3. New report documents abuses at IFC-funded hospitals, further
exposing consequences of the “billions to trillions” approach
Guest comment by Sue Godt, Development Researcher
4. Communities demand justice as IFC fails to address coal financing
fallout
5. New Independent Evaluation Office findings expose political
pressures and over-optimism in IMF’s Exceptional Access Policy
6. The IMF’s 2025 Conditionality Review: a test of reform or repeat?
7. Civil society defends feminist demands amidst threats to women’s
rights and fresh questions over the role of the BWIs
8. Breaking free from the aid trap: time for Africa to halt
international financial institutions’ austerity policies
Guest analysis by Faith Lumonya, Akina Mama wa Afrika

8. Private lenders’ resistance to Ethiopia’s debt relief highlights
urgent need for debt architecture reform
9. Civil society and communities achieve victory as World Bank
cancels tourism project in Tanzani

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FINANCE/Analysis

Civil society calls for FfD4 to revive ‘spirit of Monterrey’ and
reassert UN’s role in global economic governance

SUMMARY
- Civil society calls for Fourth UN Financing for Development
conference to put UN at heart of financial architecture reform
- Role of BWIs remains a key point of contention, amidst their stark
governance deficits
- FfD4 draft outcome document calls for intergovernmental process on
debt & SDRs ‘playbook’, but gives mixed signals on role of private
finance

The preparations for the Fourth UN Financing for Development
Conference (FfD4), which will take place in Seville, Spain, from 30
June to 3 July, are entering their latter stages. The co-facilitators
of FfD4 released a wide-ranging revised draft outcome document on 10
March, as part of the preparations for the Heads of State-level
conference this summer. The FfD4 draft document discusses the role of
the Bretton Woods Institutions (BWIs, i.e. the World Bank and the
IMF) at length, reflecting the fact that they remain key cogs of a
global economic system badly in need of fundamental reform.
The conference takes place at an important inflection point – much
like the first FfD conference in Monterrey, Mexico, in 2002, which
occurred in the aftermath of the Asian financial crisis. The BWIs
were much-criticised regarding their response to that crisis, where
they mandated harsh austerity in countries seeking assistance, with
long-lasting negative consequences.
The lead-up to FfD4 has been marked by increased global economic
tensions, as the new US administration reviews its membership in all
“international intergovernmental organisations” and ponders
attempting to force a global economic realignment. While the focus of
much discussion has been on US positioning, both the US and European
countries have sought to water down elements of the FfD4 draft
document.
In this context, reasserting the need for urgent reform has once
again been the rallying cry of civil society organisations (CSOs). As
Bhumika Muchhala of global CSO Third World Network argued during an
intervention at the Third Preparatory Committee for FfD4 in New York
in February, “The Monterrey Consensus understood that…within an
international currency hierarchy, recurrent balance of payments
problems and sovereign debt distress, the deregulated flow of capital
and global imbalances cannot be resolved on the national terrain and
reveal their steep social and economic costs through recurrent
exogenous shocks and financial crisis.”
Since Monterrey, FfD has offered an alternate convening space on
global economic governance to that provided by the BWIs, where
decision-making power remains unevenly tilted towards the US, Japan
and European countries (see Inside the Institutions, What are the
main criticisms of the World Bank and IMF?).
Bank and Fund’s unequal governance remains in the spotlight
The FfD CSO Mechanism, a civil society network that acts as a key
stakeholder in the process, argued in its feedback to the revised
draft outcome document that, “It is high time to bring the IFIs
[international financial institutions]…under proper intergovernmental
democratic governance….FfD4 should therefore initiate a profound
review of the IFI…ecosystem, hence reaffirming the role of the United
Nations in global economic governance.”
While the revised outcome document lacks a clear commitment to a
UN-led review of IFIs, it does highlight a number of relevant BWI
governance reforms. Despite recent BWI reforms (see Observer Autumn
2024), the document notes this work remains unfinished, stating, “we
commit to enhance the voice and representation of developing
countries in norm-setting, global economic governance, and
decision-making in international economic and financial institutions
to deliver more effective, credible, accountable, and legitimate
institutions.”
On the IMF’s ongoing efforts to agree a redistribution of quotas,
following its failure to do so in the 16th General Review of Quotas
in 2023, the FfD4 draft outcome notes, “As IMF members, we will work
through the Governors of the IMF to consider restoring basic votes
back to 1/9 the total voting rights in the IMF, among other measures”
(see Briefing, A way out for IMF reform). The draft also calls for a
successful conclusion to the World Bank’s 2025 shareholding review by
the end of the year, which “delivers a more equitable balance of
voting power at the institution.”
Echoing longstanding demands from the G77 and civil society, the
draft also calls for IFIs’ boards to “recommit” to a merit-based
selection of their heads, a clear reference to the undemocratic
gentleman’s agreement that sees the US and European countries
handpick the heads of the World Bank and IMF (see Background, What is
the gentleman’s agreement?).
At a cross-roads: debt, private finance and SDRs emerge as key themes
The draft FfD4 outcome document also outlines actions on key themes,
including trade, debt, private finance, international development
cooperation and reform of the international financial architecture –
while also referencing linkages between key reforms and climate and
gender (see Observer Spring 2025).
Encouragingly, on debt the draft FfD4 text notes, “we will initiate
an intergovernmental process at the United Nations, with a view to
closing gaps in the debt architecture and exploring options to
address debt sustainability, including but not limited to a
multilateral sovereign debt mechanism.” This reflects growing calls
from Southern states for UN-based reforms to the global debt
architecture. Nonetheless, the text also backs the expansion of the
G20’s often-criticised Common Framework for Debt Treatments (see
Observer Spring 2024, Winter 2020). The document does however note,
“We encourage major jurisdictions for sovereign bond issuances to
pass domestic legislation to limit holdout creditors and facilitate
effective debt restructuring,” in reference to the UK and New York
state (see Observer Spring 2025).
The document gives mixed signals on the role of private finance,
which has been heavily promoted by the BWIs in recent years (see
Observer Summer 2023). On the one hand, it notes that, “Despite
increased attention to innovative finance instruments such as blended
finance and adoption of sustainable business and finance legislation,
investment in sustainable development has not reached expectations,
nor has it adequately prioritized sustainable development impact.”
Despite this, the FfD4 draft text includes widespread support for
country platforms, which have been promoted by the Bank and other
IFIs as a way to create investible asset classes (see Dispatch
Springs 2021) – i.e. as the next iteration of the “billions to
trillions” agenda. It remains doubtful whether these efforts can be
truly ‘country-owned’ beyond states holding the responsibility for
de-risking projects.
Finally, the outcome document endorses a number of reforms related to
IMF Special Drawing Rights (SDRs), including a commitment to “review
SDRs to design a playbook that provides operational guidance and
strengthens their role during future crises and shocks, including a
rules-based approach to recommendations for SDR issuance to speed up
approval…of new issuances.” This echoes recent calls from civil
society and experts for an expanded use of SDRs to support climate
and development goals, which has been resisted by the IMF and its
wealthy shareholders (see Observer Summer 2024).
tinyurl.com/FfD4Spirit

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ACCOUNTABILITY/News

IFC ends investment in waste-to-energy incineration projects in
Gujarat, India, following civil society campaign

On 17 February, the International Finance Corporation (IFC), the
World Bank’s private sector arm, confirmed it will not provide a
planned $40 million loan to support Abellon Clean Energy Limited
(ACEL) to build four waste-to-energy (WTE) incineration plants in
Gujarat, India. The decision comes after nine months of campaigning
by civil society organisations (CSOs) and environmental groups.
On 26 June 2024, CSOs sent a letter to the World Bank executive
directors highlighting the project’s non-compliance with IFC’s
Performance Standards, among other issues. A follow-up letter to the
IFC executive directors on 21 August 2024, signed by 174 CSOs and
activists globally, noted that the IFC’s flawed Environmental and
Social Impact Assessments allowed the IFC to “give [the project] a
lower risk rating of ‘Category B’”, despite the Central Pollution
Control Board of India categorising WTE incinerators as a ‘red’
industry due to its massive environmental and social risks.
“Waste-to-energy (WTE) incineration projects are nothing but false
climate solutions, with devastating environmental, air pollution, and
health impacts,” noted Chythenyen Devika Kulasekaran, of India-based
CSO Center for Financial Accountability. “By investing in WTE, the
IFC is…deliberately turning a blind eye to the true, effective
alternatives. If the World Bank Group is genuinely committed to
addressing the climate crisis, the IFC must immediately place WTEs on
its exclusionary list,” he added.
tinyurl.com/WTEGujarat


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SOCIAL SERVICES/Commentary

New report documents abuses at IFC-funded hospitals, further exposing
consequences of the “billions to trillions” approach
Guest comment by Sue Godt, Development Researcher

SUMMARY
- Bloomberg exposé documents violations of users’ rights in several
IFC-funded hospitals across the Global South
- Reporting adds to evidence of real-life consequences of private
finance models, core to the World Bank’s derisking approach
- Findings support longstanding demands to end IFC involvement in
for-profit essential services providers

In January 2025, Bloomberg reported on deeply concerning behaviour at
several private hospitals, from Uganda to the Philippines, supported
by funds from the International Finance Corporation (IFC), the World
Bank’s private investment arm. These hospitals, when faced with
people unable to pay user fees, reportedly denied emergency care,
detained patients and even kept corpses until payment was received,
driving families into poverty. This exposé complements previous Oxfam
research (see Observer Spring 2024).
Official development assistance (ODA) has been transformed into
financialisation modalities – i.e. economic restructuring in the
financial sector’s interest (see Report, Financialisation, human
rights and the Bretton Woods Institutions: An introduction for civil
society organisations). Over the past two decades, essential services
financing has shifted away from privatisation towards private
investment by financial firms and income streams for pension and
other funds. As Julia Ngozi Chukwuma and colleagues explain, the Word
Bank has supported strategies that seek lucrative financial
opportunities and prioritise high shareholder returns instead of
positive social impact. In healthcare, new financial actors and
approaches have been integrated into national healthcare systems.
These modalities reinforce the World Bank’s “billions to trillions”
agenda, which argues that given insufficient public funds, trillions
of dollars locked into pension and other private funds are necessary
to achieve the SDGs (see Observer Summer 2023). Defined as the “Wall
Street Consensus” by economist Daniela Gabor, this approach involves
converting development goods and services into financial assets, with
ODA and state finances increasingly channelled as “blended finance”
to help offset investor risks and guarantee investor profits. This
“development as de-risking” paradigm places the burden onto the
public, particularly in the Global South. As Ana Carolina Cordilha
demonstrates, one of the impacts of financialisation in the health
sector is the internalisation of corporate and financialised
behaviours, with detrimental consequences for service delivery.
The IFC has been a major player in the privatisation and
financialisation of health, with over $9 billion invested in private
healthcare since 1999. For example, it advised the Lesotho Government
on structuring a contract with investors to develop a
privately-operated national hospital. A 7 April 2014 Oxfam briefing
note reported that the IFC earned substantial fees upon contract
signing while private investors made 17 to 25 per cent annual returns
on investment, far above typical global expectations.
IFC health investments drive human rights abuses and escalate costs
Evaluations of IFC investments in essential services reveal
significant negative consequences for individuals, governments,
systems, democratic accountability and national sovereignty. For
instance, the Health in Africa initiative, established in 2008, aimed
to attract $1 billion in investment. The 2012 midterm review
highlighted that mainly wealthier urban populations benefitted,
gender equity and transparency were neglected and intermediaries
prioritised financial returns over health outcomes. Research by New
York University and Feminist Africa into private healthcare had
similar findings. Prioritising facilities and curative care over
primary healthcare and essential services like clean water distorted
service delivery.
The IFC widely promotes public-private partnerships (PPPs) to attract
investment, assuming the private sector is better financed and more
efficient in delivering goods and services. Despite considerable
evidence about the risks, multilateral development banks and the
International Monetary Fund continue to pressure governments to
create “PPP-enabling” regulatory and policy environments (see
Observer Autumn 2022). The resulting corporate capture of development
has propelled growing state indebtedness and declining access to
quality public services.
Current dynamics: recycling a broken model
Development finance is presently being disrupted. Indebted countries
allocate ever-increasing portions of scarce public finances to repay
exorbitant commercial investments and loans. When providing
much-needed support, international financial institutions demand
austerity measures and intensify structural changes to attract
investors, which diminish fiscal and policy space to satisfy human
rights obligations to water, healthcare and education, all of which
are embedded in the SDGs (see Observer Winter 2023).
The freezing of USAID programmes and the UK’s rerouting of
development funding towards military spending herald new ODA
directions, enriching investors and saddling borrowing countries with
unpayable debt. Although the World Bank’s chief economist Indermit
Gill declared the billions to trillions agenda “a fantasy”, Global
North narratives will likely re-emphasise attracting
yet-to-materialise private investment. Government costs will likely
escalate through assuming more private sector risk and/or
guaranteeing more profits.
In June 2022, education actors successfully pushed the IFC to stop
financing of private education as the World Bank froze direct and
indirect investments in private for-profit pre-primary, primary and
secondary schools (see Observer Summer 2022). The IFC must do the
same again and honour longstanding calls to stop funding for-profit
healthcare!
tinyurl.com/IFCHealth


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ENVIRONMENT/News

Communities demand justice as IFC fails to address coal financing
fallout

SUMMARY
The International Finance Corporation (IFC), the World Bank’s private
sector lending arm, is under scrutiny for failing to address harms
caused by its support of Rizal Commercial Banking Corporation (RCBC),
which financed ten coal-fired power plants in the Philippines. The
project led to forced displacement, health issues and environmental
damage. Yet, IFC’s December 2024 Management Report indicated no plans
to address these harms. Moreover, a January report by the Compliance
Advisor Ombudsman (CAO), the IFC’s independent accountability
mechanism, confirmed that while the IFC identified specific risks,
actual impacts remain unaddressed.
This case provides yet another example of the risks associated with
financial intermediary lending, where public development banks invest
in private banks, prioritising profit over environmental and social
standards (see Observer Spring 2024, Winter 2023). Civil society
organisations have called this a “moral failure and reputational
risk” for the World Bank Group, especially given the IFC’s prior
commitments to remediate harms associated with its financing
activities.
“Eight years since filing the complaint, and four years since the CAO
finding of IFC’s violation of its Performance Standards, affected
communities continue to demand remedies as they confront the daily
realities of pollution, sickness, displacement, lack of water, and
threats and reprisal, which have only worsened ever since,” noted
Aaron Pedrosa, of the Philippine Movement for Climate Justice. “Our
case is not just a test case of complaints initiated under the new
CAO policy, it is a test for the IFC, and the broader World Bank
Group, to deliver remedies when their direct or indirect investments
cause harm to people and planet,” he stressed.
tinyurl.com/IFCAccountability

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IFI GOVERNANCE/News

New Independent Evaluation Office findings expose political pressures
and over-optimism in IMF’s Exceptional Access Policy

SUMMARY
- IEO found Fund’s Exceptional Access Policy failed to enforce
stricter safeguards
- Instead, the policy has been applied inconsistently, and has been
shaped by political pressures

In December, the IMF’s Independent Evaluation Office (IEO) published
its evaluation of the Fund’s Exceptional Access Policy (EAP).
Established in 2002, the EAP was intended to impose stricter
safeguards for countries seeking IMF loans beyond normal limits –
standard borrowing caps based on a country’s IMF quota share. To
qualify, countries must meet four criteria, including experiencing
severe balance of payments pressures and demonstrating debt
sustainability.
Political pressures and lack of even-handedness
The IEO evaluation raised significant concerns, noting that the EAP
“has not provided a substantively higher standard for EA programs
compared with NA [normal access] programs.” The Fund’s ad-hoc
approach, “often in response to high-profile cases, created a
perception of lack of evenhandedness,” exposing the IMF to “political
pressure to provide EA even when the prospects for success were poor
or the sovereign debt burden likely unsustainable,
and increase risks for the Fund’s financial position.”
A 2020 study by US-based Boston University’s Global Development
Policy Center found countries with greater voting power at the IMF,
stronger trade ties with Western Europe, or alignment with Western
Europe in the United Nations General Assembly tended to receive less
stringent fiscal consolidation conditions in IMF programmes, overall.
Worsening debt risks and economic dependence
The IEO highlighted that over-optimism in debt sustainability
analyses (DSAs) and macroeconomic projections was more pronounced in
EAP programmes, whereby “Fund access effectively becomes a substitute
for necessary restructuring.” Former IMF General Counsel Sean Hagan
argued in a January 2025 Financial Times article that, “Private
creditors are fearful of being subordinated to the IMF in the event
of a future – and potentially very likely – debt restructuring.” The
IEO stated that EAP was “generally ineffective in catalyzing private
capital inflows, and they rarely involved debt restructuring.”
The IMF’s $57 billion loan to Argentina in 2018, the largest in its
history, exemplifies these concerns. Despite doubts over Argentina’s
debt

sustainability, the IMF proceeded with lending under the EAP, with
the Fund admitting in its ex-post evaluation it was “well understood
to be high-risk.” Political pressure also shaped the decision –
Argentina’s government said the loan backed former President Mauricio
Macri’s re-election (see Observer Spring 2022).
Francisco J. Cantamutto, economist at Universidad Nacional del Sur
and National Council for Scientific and Technical Research in
Argentina argues, “Despite the fact that Argentina didn’t comply with
the conditions, the IMF approved the EA and continued disbursements
until the government lost the 2019 election. During this period, the
Fund financed a capital outflow of $45.1 billion, against its own
constitutive agreement.”
The IEO made five recommendations to the EAP, including conducting
regular reviews of access limits to assess whether they adequately
serve members’ balance of payment needs, and introducing an
exceptional clause for situations where EA programmes do not meet EAP
criteria – though this risks creating a loophole for politically
motivated access to EA, as noted by Sean Hagan. In her formal
response, IMF managing director Kristalina Georgieva said that a Fund
review of the rules governing EA was “needed to ensure that the
policy remains fit for purpose in an evolving global context”.
tinyurl.com/IMFExceptionalAccess

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CONDITIONALITY/News

The IMF’s 2025 Conditionality Review: a test of reform or repeat?

SUMARY
- Review risks repeating past failures, with austerity-driven
policies worsening inequality and economic hardship
- Civil society criticism highlights a lack of meaningful
consultation, raising doubts about prospects of genuine reform

In a period of rising global instability, increased geopolitical
tensions and a worsening climate emergency, the International
Monetary Fund (IMF) is conducting an extensive Program Design and
Conditionality Review, aiming to measure the effectiveness and
adaptability of IMF programmes. The Fund’s last conditionality review
– conducted in 2018 – exposed the IMF’s persistent failure to learn
from past mistakes. While the 2018 review claimed that 75 per cent of
programmes were “partially or fully successful”, this vague metric
sidesteps the harsh reality: 60 per cent of countries are in debt
distress, raising questions about the ability of Fund programmes to
assist states to escape recurrent debt crises. Though the IMF has
increased lending to 93 countries today, up from 68 in 2018 – its
conditionality continues to entrench economic hardship, fuel
inequality and prioritise creditor interests over sustainable
development (see Observer Summer 2019).
Austerity, debt trap and the fictions of economic recovery
Despite the Fund’s 2018 review confirming what critics had long
raised – that fiscal consolidation is not effective in ensuring
sustainable growth – the IMF’s obsession with it remains unchanged.
Harsh fiscal adjustments, cuts to social spending and public sector
layoffs disproportionately harm the most vulnerable, as academic and
civil society evidence has documented (see Observer Winter 2023).
Although the IMF increasingly includes ‘social spending floors’ in
programmes as supposed safeguards, Oxfam’s 2023 research showed these
are often non-binding, lack transparency and fail to prevent the
erosion of social protection systems.
Another glaring issue is the IMF’s chronic overestimation of economic
recovery. The 2018 review admitted that programme projections were
“overly optimistic” and acknowledged better outcomes where debt
restructuring was included. Yet the Fund continues to set unrealistic
fiscal targets, pushing governments into premature austerity under
the guise of “debt sustainability”, contributing to “the worst debt
crisis ever” – twice the distress levels seen before Heavily Indebted
Poor Countries (HIPC) relief – locking countries into dependency and
paving the way for future bailouts that favour creditors over
citizens (see Observer Summer 2023).
The 2018 review acknowledged major design flaws but failed to deliver
meaningful reform. As a November 2022 study by the Boston University
Global Development Policy Center noted, conditionality policies are
influenced by political choices shaped by dominant shareholders, not
just technical considerations – raising enduring concerns over
‘even-handedness’ of the Fund programmes. Despite repeated promises
of more flexible, country-specific approaches – a key 2018
recommendation – the IMF continues to impose rigid structural reforms
that undermine national sovereignty. Often out of sync with local
realities, these measures have triggered widespread unrest,
contributing to the IMF’s growing “protest problem” (see Observer
Autumn 2024).
Hopes for meaningful change this time are fading. The review timeline
and consultation process remain unclear, despite 70 civil society
organisations calling for transparency in a September 2024 letter
(see Observer Autumn 2024). “Despite engaging in new areas such as
gender and climate, IMF programmes
reinforce unequal global dynamics and incentivise austerity and
extractivism. The
review must assess whether IMF programmes enable climate-resilient,
rights-based development,” said Federico Sibaja, IMF Campaign Manager
at Recourse.
tinyurl.com/IMFConditionality

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GENDER/News

Civil society defends feminist demands amidst threats to women’s
rights and fresh questions over the role of the BWIs

SUMMARY
- The ongoing anti-gender rhetoric is furthering the global siege on
women’s rights
- Fresh questions over approach of World Bank and IMF to gender
arise, given controversial track record

- Feminists and civil society organise around feminist demands
accross multilateral spaces to couter retrogression on women’s right

It is a dangerous time for gender as a development priority. As
Donald Trump entered office early this year for his second term as
President of the United States, critics warned the transition would
result in greater threats to women and girls. The attack on women,
girls and gender minorities has come rapidly. The US government’s
anti-gender position comes alongside the shutdown of the US Agency
for International Development (USAID) and major cuts to Overseas
Development Assistance (ODA) by other wealthy shareholders to the
World Bank Group (WBG) and IMF, including the Netherlands and the
United Kingdom, as well as other quiet reductions of resources for
women’s rights initiatives in countries such as Canada. Amidst the
deepening global siege on women’s rights, civil society organisations
(CSOs) are defending feminist demands across multilateral spaces.
These realities bring fresh questions over the approach of
institutions like the WBG and the IMF to gender equality, given their
controversial track record, making it more important than ever that
they listen to feminists and critics, especially in the Global South.
Despite cuts, feminists are holding the line on multilateralism
In March, the 69th Commission on the Status of Women (CSW69) took
place at the United Nations (UN) in New York on the 30th anniversary
of the Beijing Declaration and Platform for Action. Feminists’ calls
for the review of Beijing30+ were strong. Advocates spoke and shared
position statements throughout the fortnight to highlight what
feminists value about multilateralism. They provided a clear path,
built on historic wins borne out of pressure from CSOs and feminists.
They stressed institutions and leaders must continue to strongly
support these efforts in the face of retrogression. Katie Tobin of
US-based Women’s Environment and Development Organisation (WEDO)
emphasised the importance of previous hard-won UN agreements such as
the 2002 Durban Declaration and Programme of Action, which
concretised crucial commitments to anti-racism, the 1997 Kyoto
Protocol, which operationalised the United Nations Framework
Convention on Climate Change, and the 1986 Declaration on the Right
to Development, all of which were agreed upon the principles of the
Universal Declaration of Human Rights.
Amidst a fresh wave of austerity in low-and middle-income countries,
the serious harm that will be felt particularly deeply by women,
girls and gender minorities if support for feminist principles
declines cannot be understated. Thus far, the influence of the US
stated positions and actions – in withdrawing from the UN Framework
Convention on International Tax Cooperation, in its statements at
this year’s Fourth UN Financing for Development Conference (FfD4)
preparatory meetings, and in its refusal to accept language relating
to gender at CSW69 – do not seem to have swayed other governments,
and language on the importance of gender remains present across all
three processes.
Countries and institutions must act on the calls from feminists and
wider civil society, such as supporting debt cancellation strategies
– including the creation of a UN Framework Convention on Sovereign
Debt – that go beyond current failed approaches. Global South
feminists have argued sovereign debt is inherently a feminist issue
in which the impact on women and gender minorities is often obscured
and overlooked, despite the fact that it is women and marginalised
groups who pay the price. Progressive taxation is also consistently
advocated for as a crucial feminist issue. All of this exists amidst
a deepening crisis of social reproduction and paid, unpaid and
underpaid care work, which props up economies without being
sufficiently valued. Feminists have long called for a recognition of
‘decent work’ to be adopted by institutions such as the World Bank
and the IMF, including in the recent African Civil Society
Organizations Position Statement on Beijing+30 Review. Instead, the
Bank and Fund continue to focus on women’s ‘labour force
participation’ (see Dispatch Annuals 2024).
Billions to trillions is not the answer
Crucially, this political reality brings fresh questions over the
approach of institutions like the World Bank and the IMF to gender
equality. There are hard won gains civil society has fought for in
recent years on the Bank’s gender work (see Observer Autumn 2024),
including recognising the value of care, and centering human rights
and Sustainable Development Goal 5 in the newest gender strategy.
However, through the promised reform of the Bank under its ‘Evolution
Roadmap’, gender initiatives remain rooted in the logic of a private
sector-led approach to development, which sees women as an untapped
source of ‘human capital’ that can be profited from (see Observer
Autumn 2023, Autumn 2018). This approach marries well with the
increasingly transactional and financially austere approach to
development amidst ODA cuts.
Countries must not fall down the ‘billions to trillions’ trap that
promises to produce the financing needed by mobilising and derisking
private investment, as resources will be funnelled into mitigating
risks for private investors – who may fail to adequately deliver –
and away from essential public services relied on especially by the
women, girls and gender minorities currently facing attack on the
global stage. Notably, the WBG and the IMF have failed to implement
calls from civil society to address structural barriers to gender
equality by acknowledging the gendered harms of macroeconomic policy
promoted through lending (see Briefing, Learning lessons from the
Covid-19 pandemic: The World Bank’s macroeconomic policies and
women’s rights), as well as to support decent work, sufficiently
funded essential public services and most crucially, breaking from
the macroeconomic policies that continue the cycle of debt, austerity
and regressive taxation.
tinyurl.com/FeministDemands


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FINANCE/Analysis

Breaking free from the aid trap: time for Africa to halt
international financial institutions’ austerity policies
Guest analysis by Faith Lumonya, Akina Mama wa Afrika


SUMMARY
- ‘Aid trap’ continues despite significant ODA cuts amidst political
change in donor countries
- BWIs continue to facilitate Finance of essential services across
Africa, deepening dependency trap and compromising sovereignty

Most people around the world are oblivious to the ways in which
global power relations determine African governments’ capacity to
respond to socio-economic and political challenges. Over the past 100
years, foreign aid structures that began with European colonialism
have become tied to shifting economic, social and political interests
in favour of the Global North. Even after colonised African states
gained their political independence, foreign support as Official
Development Assistance (ODA) continued, with a focus on economic
development, albeit under the direction of multilateral organisations
like the United Nations, the International Monetary Fund (IMF) and
the World Bank Group (WBG).
The resultant effects of the way ODA is structured have been that
African governments have increasingly lost the policy and fiscal
space and sovereignty to develop their own developmental policies,
while institutions, as donors, continue to play a significant role
through policy conditionalities and programme development. It is no
wonder that the recent decision to immediately freeze global aid
flows by the United States Agency for International Development
(USAID) sent shockwaves through the global health community. It
unleashed a “state of uncertainty” about how HIV/AIDS, tuberculosis,
malaria and related programmes will respond. Additionally, the UK’s
announcement of further ODA cuts presents further uncertainty.
In 2001, African governments committed to allocate at least 15 per
cent of their annual budgets to health financing. However, more than
20 years later, the average allocation of government budgets to
healthcare across Africa is 7.2 per cent. The out-of-pocket
expenditure on healthcare in Sub-Saharan Africa averages over 35 per
cent of total funding, and is the second-highest rate globally after
South Asia. In fact, a 2017 report indicated that out-of-pocket
spending in countries like Nigeria, Cameroon, Equatorial Guinea and
Sudan was over 70 per cent. This reliance on out-of-pocket spending
is systemic and deeply structural, and has placed an unfair burden on
citizens.
Structural adjustment and the ‘aid trap’: kicking away the ladder
The role of the Bretton Woods Institutions (BWIs) – the World Bank
and the IMF – in deepening foreign aid dependency cannot be ignored.
In the 1980s, the BWIs pioneered the Structural Adjustment Programmes
(SAPs) – i.e. making financial resources dependent on liberalisation,
deregulation and privatisaion – in regions including Africa and Latin
America. SAPs were a set of conditionalities that drove the
restructuring of African economies. These included the implementation
of austerity programmes, i.e. spending cuts particularly to
healthcare, education, social protection, agricultural extension,
among others; increasing tax rates, particularly indirect consumption
taxes; or a combination of both. Since then, key social sectors such
as healthcare have fallen into the hands of donors and the private
sector. These reforms have been renamed as ‘prior actions’ in World
Bank Development Policy Financing (see Inside the Institutions, What
is WBG Development Policy Financing?) and continue to serve the same
function – ramping up especially now under the newest wave of
austerity.
The BWIs’ austerity policies effectively diminish African states’
direct involvement in development, consequently creating a lacuna
that is claimed must be filled by ODA. It is therefore not surprising
that the US, the European Union and other wealthy states are key
donors, also investing in for-profit healthcare, and consequently
benefitting from such investments. As we reflect on the words of
former Zambia Vice President Simon Mwansa Kapwepwe, “If as Africans
we don’t handle our independence very well, colonisers will come back
in the form of investors. Colonialism is like a chameleon, it changes
its colours.” It is clear that the dominant influence of Global North
states within the IMF that effectively promulgates austerity measures
in Africa is not by accident. In the case of the IMF, the US, as the
Fund’s largest shareholder with 16.5 per cent of voting power, wields
veto power over crucial policy decisions, with some requiring 85 per
cent approval.
Historically, donor support has been a notable component of Africa’s
health financing, yet it is unsustainable as a primary source. In
most Sub-Saharan African nations, donor funding contributes up to 20
per cent of healthcare expenditure. A 2020 study revealed that in
Malawi and Mozambique, donor funds accounted for as much as 60 per
cent of healthcare expenditure. Donor funds are also often designated
for specific health programmes – such as vaccination, HIV/AIDS,
malaria, tuberculosis and more recently, maternal and child health –
limiting their flexibility for broader healthcare needs. As such,
they promote short-term solutions that centre foreign and
corporate-driven interests and treat women, youth, indigenous, black
and brown people as third class citizens.
Aid, in whatever form, is a neo-colonial tool and an instrument of
imperial domination. African governments, now more than ever, must
become more conscious of IMF and WBG policy conditionalities that
undermine their sovereignty and space to determine their development
trajectories.
tinyurl.com/AfricaAidTrap

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FINANCE/News

Private lenders’ resistance to Ethiopia’s debt relief highlights
urgent need for debt architecture reform

SUMMARY
- Private creditors refuse to participate in Ethiopia’s debt
restructuring
- Ethiopia’s experience highlights the need for urgent reform of the
international sovereign debt architecture and review of the IMF’s
role within it

Ethiopia is facing challenges in reaching an agreement with
bondholders under the G20’s Common Framework for Debt Treatments (CF)
after its 2023 default, highlighting the need for structural reform
of the current ad hoc international debt restructuring system (see
Observer Spring 2023). The country began debt relief negotiations
under the CF in 2021. However, these were delayed by the country’s
civil war, which ended in 2022. Ethiopia made payments until 2023,
giving creditors no reason to negotiate.
In July 2024, the IMF agreed a four-year $3.4 billion Extended Credit
Facility Arrangement with Ethiopia after receiving assurances of a
debt reprofiling agreement from a committee of bondholders. This
would have resulted in a 18 per cent “haircut” while still ensuring
significant profits for bondholders. However, BNN Bloomberg reported
on 3 October 2024 that bondholders refused the government’s proposal.
The country is the latest victim of the dysfunctional CF, which even
the World Bank has criticised (see Dispatch Springs 2023). As the
Financial Times (FT) reported on 17 February, the bondholder
committee “accused the fund [IMF] of attempting to ‘reverse-engineer’
debt relief...and also said it was reserving legal rights over the
debt after it rejected a proposal by Ethiopia to write down the bond
last year.”
Private lenders continue to hold up critical debt restructuring
As outlined by the FT, bondholders have accused the IMF of undue
pessimism in its assessment of the sustainability of Ethiopia’s debt.
This contradicts evidence provided by experts, which has repeatedly
shown the Fund’s debt sustainability assessments are overly
optimistic about states’ growth prospects and debt carrying capacity,
causing devasting economic and human rights consequences (see Inside
the Institutions, What is the WB and IMF debt sustainability
framework?). In Ethiopia’s case, the IMF is projecting that exports
will grow 60 per cent faster than the historical average.
In January, the African Forum and Network on Debt and Development
(AFRODAD), the Horn of Economic and Social Policy Institute (HESPI)
and UK-based civil society organisation, Debt Justice, published an
analysis of Ethiopia’s debt restructuring process. It stressed, inter
alia, that bondholders continue to hold out on essential debt
restructuring despite having been offered a generous deal that would
have enabled them to make a 31 per cent profit. A 17 February
statement emphasised that, “Bondholders using the threat of legal
action to push debtors into worse deals shows exactly why changes are
needed to legally suspend payments during debt restructuring
negotiations….Creditor governments need to do far more to make
private lenders participate in debt relief, including passing laws in
the UK and New York so that hedge funds, banks and asset managers
cannot hold out from fair levels of debt relief.”
tinyurl.com/EthiopiaDebt

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ACCOUNTABILITY/News

Civil society and communities achieve victory as World Bank cancels
tourism project in Tanzania

The World Bank has cancelled its $150 million loan to finance the
Resilient Natural Resource Management for Tourism and Growth (REGROW)
project to expand Tanzania’s Ruaha National Park (RUNAPA).
The announcement was made public after nearly two years of advocacy
“to hold the Bank accountable for enabling the expansion of RUNAPA
and supporting TANAPA, the paramilitary Tanzania National Parks
Authority,” one of the leading implementing agencies, which
communities have accused of killings, evictions and cattle seizures
among many other violations. The Bank initially suspended
disbursements to the Project in April 2024 alleging the Tanzanian
government’s “non-compliance with [the Bank’s] Environmental and
Social (E&S) obligations.” In October 2024, nine UN Special
Rapporteurs sent a letter to the Government of Tanzania, expressing
serious concerns and seeking clarity on the project’s due diligence.
In a context where the Bank’s accountability has been increasingly
questioned (see Observer Winter 2024, Autumn 2024), “The historic
cancellation of the REGROW project…was a necessary first step towards
justice,” said Andy Currier, Policy Analyst at the Oakland Institute.
“The Bank must now be held accountable by revoking the park expansion
enabled by the project and paying comprehensive reparations for the
killings and economic devastation it has caused,” he added.
tinyurl.com/REGROWProject

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