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Bretton Woods Observer Autumn 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. Fuelling authoritarianism: The role of the Fund and Bank in
eroding the social contract
2. Civil society awaits Bank’s Fragility, Conflict & Violence
strategy
3. BWP launches new briefing on IMF surveillance
4. UN80: A missed opportunity for transformation?
Guest comment by Surya Deva, UN Special Rapporteur on the right to
development
5. Civil society urges the IFC and ADB to cancel financing for
Pakistan
copper mine
6. Mass protests erupt in Angola following IMF-backed fuel subsidy
removals
7. Future of IMF’s climate work uncertain, as climate crisis
intensifies
8. International Court of Justice ruling delivers ‘earthquake’ on
states’ obligations to address climate crisis
9. Beyond loans: The human rights impacts of IMF conditionalities
in Argentina Guest analysis by Julia Gerlo, Fundación Ambiente y
Recursos Naturales
10. IFC Sustainability Review: Overlooking structural issues
11. New investigation highlights harms of for-profit healthcare
funded by IFC-backed private equity group

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FINANCE/Analysis

Fuelling authoritarianism: The role of the Fund
and Bank in eroding the social contract

SUMMARY
- US tariffs, hostility to multilateralism and pursuit of expansive
presidential authority rekindle debates about rise of populism and
authoritarianism
- IMF and World Bank concerned about threats to the social contract
and democratic backsliding for decades
- Yet IMF and World Bank policies remain unreformed and continue to
contribute to the dynamics that threaten the democratic state

US President Donald Trump’s aggressive use of trade tariffs, attacks
on central bank independence (see Observer Summer 2021)and the
institutions of the democratic state, multilateralism, overseas
development assistance and use of industrial policy has rekindled
debates about the rise of populism and authoritarianism, and the
decline of liberal democracies. Havard Professor Dani Rodrik argued
in 2023 that the reaction to heterodox trade policies amount to a
misrepresentation of history, where the economic, social,
environmental and sovereignty costs of hyper-globalisation are
ignored and the benefits of greater policy autonomy forgotten. This
is particularly true of the World Bank and IMF, where their extreme
democratic deficit allows Global North shareholders to pursue
industrial policies at home while using the Bank and Fund to foster
globalisation, austerity and de-risking of international private
capital flows in the Global South. July’s 4th Conference on Financing
for Development (FfD4) produced the disappointing Seville Commitment
despite demands to reform the World Bank, IMF and wider financial
system (see Observer Spring 2025). The conference showed that,
despite concerns about rising inequality and political fragmentation
outlined in the World Economic Forum’s Global Risks Report 2025 and
the UN’s World Social Report 2025, the Global North remains unwilling
to support urgently needed reforms. In response, global civil society
– having linked debt and austerity to the rise of authoritarianism in
the Global South – continues to demand a new Eco-Social Contract, an
end to austerity, and for public ownership and management of
essential services. Bank and Fund have long recognised the perils of
the unequal system they underpin In an October 2014 speech, former
IMF Managing Director and current European Central Bank President
Christine Lagarde called for a new multilateralism, noting that, “too
many people feel left out, too many people feel frustrated…[Possibly
leading to a] serious breakdowns in social and political cohesion.”
After Donald Trump’s first election in 2016, the IMF published a blog
titled, The buzz of populism and its pull on the economy, stressing
the role of inequality in feeding support for populist parties. The
IMF’s October 2024 World Economic Outlook Report dedicated a chapter
to “Understanding the social acceptability of structural reforms”.
The World Bank’s Background Paper for the 2011 World Development
Report, meanwhile, highlighted the link between horizontal inequality
(HI) and conflict, noting, “none of the issues on the leading
agenda—notably, poverty reduction, promotion of economic growth and
structural adjustment—incorporates consideration of HIs.” More than a
decade on, the World Bank’s Annual Conference on Development
Economics in July was titled “Development in the age of populism”. In
a blog preceding the event, World Bank Chief Economist Indermit Gill
stressed that populist discontent can be at least partially explained
by the hubris of the policy-making elite, including at the World
Bank, given, “the realities encountered by millions globally have
deviated markedly from the positive-sum outcomes predicted by
theory.” The threats posed to the global and domestic social contract
by economic policies that contribute to inequality and perpetuate an
unjust global governance architecture were also identified as a
pressing concern by the 2023 UN Secretary General’s New Agenda for
Peace report (see Observer Winter 2023). Bank and Fund policies
continue to contribute to authoritarianism and national populism
Despite increasing research and debate about the erosion of the
social contract and its impact on the democratic state, the Bank and
Fund continue to fail to address their contribution to both. A July
report by the UN Independent Expert on Debt and Human Rights noted
that, “…policies of international financial institutions can worsen
inequality, misallocate resources and fuel political unrest.” The IMF
continues to support austerity measures and fails to address the debt
crisis (see Observer Summer 2025), thus depriving states of resources
essential to uphold the social contract. The World Bank, under
President Ajay Banga, has redoubled its commitment to private
sector-led growth and continued support for targeted social
protection, despite concerns raised by civil society (see Observer
Summer 2025, Spring 2024, Summer 2023, Winter 2022, Winter 2022). As
stressed by Ashar Saleem, Farzad Rafi Khan, and Pablo Martin De Holan
in their November 2023 article in the journal Organization, the
de-risking state on which the Bank’s development model relies
requires a strong state that, “has the willingness and the capacity
to organize and enforce most aspects of life on the principles of
markets and competition, materialized into laws and institutions but
also into repression of demands for equality, democratization, and
redistributive change.” It is little surprise then that neoliberal
policies that have always relied on a strong and active state have
led not to the flourishing of the democratic, noninterventionist
state, but its opposite. While much hand-wringing about the rise of
populism and authoritarianism continues, it is evident that its
causes are fairly well understood and that the principal constraints
to combating threats to democracy and supporting just and
environmentally sustainable development remains an unwillingness to
undertake urgently needed reform of the international governance and
policy architecture, including at the World Bank and IMF.

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RIGHTS/News

Civil society awaits Bank’s Fragility, Conflict & Violence strategy
As the World Bank’s Fragility, Conflict and Violence (FCV) existing
strategy expires this year, a new strategy is expected to be
finalised in 2025. With the Annual Meetings in Washington DC this
October and the end of the current 2020-25 strategy period nearing,
the status of the anticipated public consultation and development of
the new strategy, following on from previous years, is unclear
(Observer Winter 2019). Civil society is cautiously watching for
waning commitment to formal reviews and consultation processes of
Bank policies, amidst ongoing reform and threats to the Bank’s
climate and gender work from the new US administration (see Dispatch
Springs 2025). As of 3 September, the Bank shared in a blog post that
the new FCV Strategy was under development, and that the
International Development Association’s (IDA) – the World Bank’s low
icome arm – 21st replenishment cycle offers a critical opportunity.
Despite the keenness of civil society organisations (CSOs) to engage
in a public consultation (see Observer Summer 2025), it remains to be
seen whether this will take place at the Annual Meetings. CSOs fear
the public silence may be indicative of a more targeted and low-key
engagement process with a select number of participants, which would
be at odds with longstanding CSO calls to ensure processes are open,
inclusive and diverse in their citizen engagement efforts (see
Observer Summer 2024).

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FINANCE/News

BWP launches new briefing on IMF surveillance

The Bretton Woods Project is publishing a new briefing on IMF
surveillance ahead of discussions on the IMF’s Comprehensive
Surveillance Review (CSR) at the 2025 Annual Meetings in Washington
DC (see Observer Summer 2025). The briefing, entitled Brace for
impact: Social and gender inequality in IMF surveillance, uses data
from the recently released IMF surveillance scanner, and Article IV
reports since the publication of the IMF’s Interim Guidance Note on
Mainstreaming Gender in January 2024, to analyse the Fund’s evolving
approach to gender. Findings indicate that the IMF’s core policy
direction has remained consistent over a 14-year period and is
identical to that previously described as “structural adjustment”,
consisting of austerity measures, a shrinking of the state and
empowerment of the private and external sector. The data reveal that,
while there has been an increase in narratives around social and
gender impacts, current policy responses are inadequate and where
responses are present, they are hampered by policy incoherence.

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IFI GOVERNANCE/Comment

UN80: A missed opportunity for transformation?
Guest comment by Surya Deva, UN Special Rapporteur on the right to
development

SUMMARY
- World confronts economic, environmental and institutional disorder
that requires urgent multilateral action
- UN80 reform process has thus far proved superficial and unambitious
- Member states must ensure reform results in improved governance
architecture, strengthened accountability, well-funded human rights
structures and respect for planetary boundaries

Why has the United Nations (UN) been failing repeatedly to maintain
peace and security, one of its foundational goals? Is the UN fit for
the purpose of dealing with emerging challenges such as climate
change and disruptive technologies? This piece argues that UN80, an
initiative to reform the UN on the occasion of its 80th anniversary,
is turning out to be a missed opportunity for the strategic
transformation required to keep the UN relevant. The UN, an
institution built on the ruins of World War II, is facing an
unprecedented legitimacy crisis. The crisis is real because all three
pillars stipulated in the UN Charter – peace and security, human
rights, and sustainable development – are shaking. With a
dysfunctional Security Council, the world is experiencing the highest
number of conflicts since World War II (see Observer Winter 2023).
States are enjoying impunity for gross violations of human rights.
Ten years after the launch of the 2030 Agenda for Sustainable
Development, only 35 per cent of the Sustainable Development Goals
(SDGs) targets have shown adequate progress. What reforms would make
the UN fit for the purpose in the 21st century? As the UN marks its
80th anniversary, the UN Secretary-General launched an initiative in
March 2025 for “ambitious, system-wide reform” of the UN. The reform
process is organised around three workstreams: identifying and
addressing inefficiencies; reviewing and addressing duplication in
the implementation of mandates; and examining possible structural
changes and programme realignments. Different UN entities are
developing reform proposals around seven thematic clusters for
further consideration by the UN80 Task Force and then approval by
states. Despite rhetoric, reforms remain insufficient While UN80 is
presented as an “opportunity for transformation”, the proposals so
far look far from being transformative. For example, numerous
measures (e.g., up to 20 per cent staff cuts, moving staff to cheaper
locations, and fewer reports and meetings) have been proposed to cut
costs. However, these measures are neither transformative nor should
they have waited for UN80. Similarly, the measures proposed in the
Report of the Mandate Implementation Review about the creation,
delivery and review of mandates are anything but transformative –
most of these proposals are aimed at improving efficiency. The UN80
process will be truly transformative only if it addresses the root
causes of the crumbling three UN pillars and, in turn, responds to
the emerging world disorder – comprising economic, environmental and
institutional disorder. The Pact for the Future, adopted by states in
September 2024 during the Summit of the Future, outlined a blueprint
for such transformative reforms, including: Reform of governance
architecture: the current international governance frameworks
concerning peace and security, trade, investment, financing and
taxation are inequitable. The Security Council is a case in point.
The current membership and voting structure have become a barrier to
the Council discharging its mandate of securing peace and security.
Consequently, conflicts are consuming resources that should have gone
to fund the SDGs and human rights. Reform of the international
financial architecture, including the governance structure of the IMF
and the World Bank (see Observer Summer 2022), is equally urgent to
enable developing countries to leave no one behind, meet their
international human rights obligations and contribute to social and
political stability (see pages 1-2). Strengthen accountability:
States breaching agreed international law norms must face collective
deterrent consequences rather than be able to hide behind national
sovereignty. Moreover, states that consistently fail to pay their
membership contributions on time must not be allowed to participate
in UN processes. It is also critical to hold accountable
multinational corporations that can lobby and influence UN processes
to serve their interests but avoid direct international obligations.
Business lobbying at UNFCCC and plastic pollution treaty negotiations
illustrate this paradox. Fund human rights: with less than 5 per cent
of the UN budget allocated to human rights, it is a forgotten pillar.
This is so despite a collective recognition by states that the three
UN pillars “are equally important, interlinked and mutually
reinforcing.” Instead of funding war economies, states should boost
significantly investment in all human rights for everyone to
contribute to lasting peace and sustainable development. Respect
planetary boundaries: since six of nine planetary boundaries have
been breached, any future reforms of the UN must embed respect for
planetary boundaries into its institutional design, mandates and
programmes. Two climate change advisory opinions issued by the
International Court of Justice and the Inter-American Court of Human
Rights provide key elements of such embedding (see page 6). In short,
in order for UN80 to live up to its title, nations who are part of
the UN need to act in a “united” way to deal with multiple
interrelated crises. The Pandemic Agreement and the Seville
Commitment demonstrate that states can still reach consensus on
issues of common global concern. However, to maintain peace,
safeguard multilateralism, strengthen international cooperation,
promote human rights, respect nature, achieve sustainable development
and build fairer institutions, the UN requires a strategic
transformation – not reactive and rushed reforms that we have seen so
far to grapple with the budget crisis triggered by the Trump
administration.

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ACCOUNTABILITY/News

Civil society urges the IFC and ADB to cancel financing for Pakistan
copper mine

Over 30 civil society groups published a letter on 19 August urging
the International Finance Corporation (IFC), the World Bank’s private
sector arm, and the Asian Development Bank (ADB), to reconsider their
financing for the Reko Diq copper mine in Balochistan, Pakistan. The
project is owned and developed by Reko Diq Mining Company (RDMC), a
joint venture between Canadian corporation Barrick Gold, Pakistan’s
federal government, and the Balochistan provincial government.
According to the Financial Times, RMDC is seeking to raise $3.5bn in
financing from the US and international lenders. On 12 June the IFC
approved a combined $700 million investment in RDMC. The letter warns
the project, located in a militarised region, “risks exacerbating
social tensions, attacks against peaceful activists, and
environmental and social destruction.” It adds that the investment
risks IFC’s (and ADB’s) compliance with their environmental and
social safeguards, and their policies against reprisals and
approaches to fragile and conflict-affected contexts. “Both the IFC
and the ADB have ignored civil society’s warnings and decided to
proceed, claiming they can hold consultations. But in a context where
human rights defenders and journalists are routinely threatened or
disappeared — and where people are afraid even to raise questions —
such consultations cannot be considered meaningful,” said Tala
Batangan, of the Coalition for Human Rights in Development.

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SOCIAL SERVICES/News

Mass protests erupt in Angola following IMF-backed fuel subsidy
removals
SUMARY
- Angolan government removes fuel subsidies amidst high debt and
tight fiscal pressures at behest of Fund and Bank
- Civil society warns that without wider debt relief, this simply
shifts the burden onto the poor

In late July, Angola saw mass protests after the government raised
diesel prices by 33 per cent, as part of a programme of fuel subsidy
cuts supported by the International Monetary Fund (IMF) and its
sister organisation, the World Bank. The IMF’s 2024 Article IV report
(see Inside the Institutions, IMF Surveillance) said Angola needed to
“return to a fiscal consolidation path”, arguing that subsidies are
fiscally costly, crowd out essential social spending, and
disproportionately benefit wealthier households. The Bank has
similarly pushed subsidy cuts as a condition for its policy-based
lending (see Inside the Institutions, Development Policy Financing).
Yet, as West Africa Weekly noted, “in Angola, where public transport,
farming, and informal markets depend heavily on cheap fuel, the
social cost of a sudden removal has been severe.” This is
particularly concerning given Angola’s unemployment stands at 14.5
per cent, inflation at 27.5 per cent, and wages remain stagnant.
Although the Fund and Bank advocate for compensatory measures, such
as the expansion of the Kwenda cash transfer to protect vulnerable
households, civil society organisations (CSOs) have repeatedly
highlighted the targeting and implementation flaws of such mitigation
programmes (see Observer Spring 2024), with the Bank itself reporting
limitations of the Kwenda system. Catherine Mithia from African
Network on Debt and Development (AFRODAD) argues, “While the IMF
considers fuel subsidies a regressive policy instrument, it is a
lifeline for half of Angola’s population that live on $2 a day.
Removing the subsidy before the government implements much-needed
social safety net programs for the most vulnerable populace is likely
going to escalate further the unrest.” Stranglehold of debt and
austerity Angola faces debt service obligations of approximately
$58.6 billion this year, or 63 per cent of its GDP. The IMF’s 2024
Debt Sustainability Assessment (DSA) judged that debt was “expected
to decline” but that Angola is still at high risk of distress, citing
heavy currency exposure (with 80 per cent of debt in foreign
currency) and dependence on volatile oil prices. Yet according to the
DSA this projected decline is expected from fiscal adjustment, with
the authorities planning to continue subsidy reform and target
savings of 2.1 per cent of GDP in the 2025 budget. CSOs have
criticised the Fund and Bank for avoiding “unsustainable” debt labels
– which could trigger debt restructuring – and instead relying on
fiscal consolidation to deliver growth (see Observer Autumn 2022). In
practice, this typically means deep cuts to essential services and
productive spending. In Angola, spending on social services has
reduced by more than 55 per cent since 2015, according to UK-based
CSO Debt Justice. Civil society has been calling for unconditional
debt relief to create genuine fiscal space for social investment –
rather than shifting the burden onto the poor through subsidy
removals, only for the savings to be diverted to debt repayment.

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ENVIRONMENT/News

Future of IMF’s climate work uncertain, as climate crisis intensifies
SUMMARY
- Despite escalating economic costs of climate impacts and primacy of
greentech in geopolitical tensions, US insists climate is not ‘core’
to Fund’s work
- Influence of IMF’s largest shareholder risks deepening IMF crisis
of legitimacy
- Key policy reviews set to outline future of IMF’s climate work

The future of the IMF’s efforts to mainstream climate into its work –
a key priority of IMF Managing Director Kristalina Georgieva during
her first term – appears uncertain, given growing hostility from the
US, the Fund’s largest shareholder, to this agenda. US Treasury
Secretary Scott Bessent made no secret of the US’s position on the
issue during a speech on the sidelines of the World Bank and IMF
Spring Meetings at the International Institute of Finance in April.
“The IMF… [now] devotes disproportionate time and resources to work
on climate change, gender, and social issues,” Bessent said. “These
issues are not the IMF’s mission”, he added. The US’s position that
climate is not ‘core’ to the IMF’s work is at odds with rapidly
escalating economic damages from the climate crisis and the
interlinkages between green technology and renewed geopolitical
tensions – both of which are increasingly shaping countries’
macroeconomic and financial stability, which are fundamental to the
Fund’s mandate. Mohamed Nasheed, Secretary-General for the Climate
Vulnerable Forum (CVF), noted in a 27 August op-ed in Newsweek that
the climate emergency risks triggering a full-blown debt crisis among
the 74 climate-vulnerable developing countries represented by the
CVF’s V20 Group, which are home to 1.7 billion people. “[V20
countries have] $746 billion in debt service payments due between
this year and 2031 – about four times our financing needs to support
our climate plans,” Nasheed wrote. “This is a crippling burden for
countries facing escalating costs in climate damages caused by a
crisis we did little to create,” he added. Amid a 11 September
Bloomberg report that the IMF’s separate climate and gender teams
have been integrated into a larger unit, the role of climate in the
IMF’s work is set to be re-litigated in two forthcoming reviews, the
Comprehensive Surveillance Review (CSR; see Observer Summer 2025) and
the Review of Conditionality (RoC; see page 7). The Fund’s
Independent Evaluation Office is also working on an evaluation of the
IMF’s climate work since the launch of its 2021 climate strategy (see
Observer Autumn 2021), which is due to be published next year. Taken
together, these events mark a pivotal movement for the future of the
IMF’s climate work. Unfinished business: IMF’s approach to climate
remains fragmented Despite Georgieva’s surreal assertion that the IMF
has “no climate experts” during a press conference at the Spring
Meetings (see Dispatch Springs 2025), in reality, the IMF’s climate
work has accelerated since 2019, with the Fund positioning climate as
core to its work from 2021 via its inclusion in the Comprehensive
Surveillance Review undertaken that year (see Observer Summer 2021),
and a staff climate strategy released shortly thereafter (see
Observer Autumn 2021). The IMF’s shareholders also approved the
creation of the Resilience and Sustainability Trust in 2022, which
has a mandate to help countries address future balance of payments
needs related to climate change (see Observer Winter 2023). However,
new research from international civil society organisation Recourse
published on 6 October found that the IMF’s growing focus on climate
is uneven – and is often in tension with its austerity-based advice
in loan programmes and surveillance. Reviewing the IMF’s surveillance
since 2022, Recourse found that the IMF remains largely focused on
long-standing priority issues such as carbon pricing and subsidy
removal, typically foregoing a fuller analysis in its surveillance of
what types of green finance are needed to ensure a whole-of-economy
transition. Its integration of climate into its debt sustainability
assessments also remains limited. “The IMF has made extremely slow
progress in supporting countries’ fulfilment of the Paris Agreement
goals,” said Federico Sibaja of Recourse. “The CSR and the RoC should
be the opportunity to address these issues, but the calls by the
current US administration to stop the climate work altogether risks
undermining this,” he added. The IMF’s staff research in recent
years, meanwhile, has flagged a number of ways in which climate is a
“critical macroeconomic issue” – but these findings have yet to be
fully integrated into IMF policy. For example, a 2023 IMF research
paper on the ‘spillover effects’ associated with an uncoordinated
transition to a low-carbon energy future found that, “During the
‘mid-transition’ period [when renewable energy increasingly displaces
fossil fuel assets],…cross-border risks could generate or exacerbate
instability in the economic, political, and financial spheres, which
may become detrimental to the global transition process itself.” The
apparent chilling effect of the new US administration on climate
policy at the Fund – amid the US’s wider war on climate science and
withdrawal of climate finance – means that such a chaotic transition
is becoming increasingly likely. In this context, the IMF’s
fragmented approach to climate is likely to deepen its ongoing crisis
of legitimacy in the face of shifting global power dynamics (see
Observer Autumn 2025).

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ENVIRONMENT/News

International Court of Justice ruling delivers ‘earthquake’ on
states’ obligations to address climate crisis
SUMMARY
- Landmark opinion affirms states have a binding legal duty to
prevent climate harm, including due to expanding fossil fuel
production
- The wide-ranging opinion has implications for governments’ voting
positions on climate-related issues at the World Bank and other IFIs

A new advisory opinion issued by the International Court of Justice
in The Hague, Netherlands, on 23 July was cheered by climate
advocates as vindicating “climate science as law.” The landmark
opinion affirmed that states have a binding legal duty to prevent
climate harm and to protect human rights from the impacts of climate
change. The ruling is likely to have far-reaching implications,
including at the World Bank and other international financial
institutions (IFIs). “This momentous ruling by the world’s highest
court doesn’t just mark a turning point in international law, but a
point of no return on the path toward climate justice and
accountability,” said Nikki Reisch of the US-based Center for
International Environmental Law. “The message is clear: there is no
carve-out for climate destruction under international law, and there
is no legal or technical bar to holding states responsible for
resulting harm,” she added. The ruling could require stronger climate
policies at IFIs, in order for states to fulfil their obligations.
Even withdrawal from the Paris Agreement – as undertaken by the US –
does not alleviate states’ obligations, per the ICJ ruling. While a
number of countries have moved to strengthen their ‘voice and a vote’
positions at the World Bank to align with a wider phaseout of public
support for fossil fuels since the launch of the Clean Energy
Transition Partnership at COP26 in 2021 (see Observer Winter 2021),
the ICJ ruling is likely to bring further scrutiny to World Bank
activities, given shareholder states are its ultimate owners. End of
climate impunity for fossil fuel companies, and their private
financiers According to UK-based law firm Leigh Day, the ICJ found
that climate change is an urgent and existential threat, and that the
failure of states to act to address this crisis constitutes an
“internationally wrongful act.” They noted that, “countries [who fail
to act] could be considered liable under international law and that
other countries could take legal action against them,” potentially
resulting in legal orders “to cease their harmful activities, rectify
the problems they have caused, or provide compensation.” The ICJ
identified, “specific climate-harming activities — such as fossil
fuel production, consumption, exploration licensing, and subsidies —
that could now be considered internationally wrongful acts.” It
indicated that states must “adequately regulate private actors’
activities and could be held liable for damage caused by their
emissions if they failed to do so.” The ICJ ruling stands in stark
contrast to investor-state dispute settlement tribunals, including
the World Bank-hosted International Centre for Dispute Settlements,
where a record number of claims have been brought by investors
related to fossil fuels and mining projects in 2025, seeking
compensation from states attempting to phase out carbon-intensive
activities (see Observer Autumn 2022).

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IFI GOVERNANCE/News

Gita Gopinath’s departure rekindles debate about US exorbitant
influence at IMF

On 22 August, the IMF’s First Deputy Managing Director, Gita
Gopinath, left the Fund to return to Harvard. By convention, European
countries select the IMF’s Managing Director, while the US Treasury
nominates the Deputy Managing Director (see Background, What is the
gentleman’s agreement?). On 18 September, the IMF announced Gopinath
will be replaced by Dan Katz, chief of staff to US Treasury Secretary
Scott Bessent, at a moment when the US is pushing the Fund to scale
back work on gender and climate (see Dispatch Springs 2025).
Gopinath’s exit comes as the IMF’s 16th General Review of Quotas,
which concluded at the end of 2023, failed to deliver urgently needed
reform – with a 50 per cent quota increase but no change to voting
shares – making it harder for the Global South to increase their vote
shares in future reviews and preserving the US’s veto power. Emma
Burgisser of UK-based CSO Christian Aid noted, “There is a good
reason why 192 countries just agreed in Sevilla that the IMF should
consider enhancing the geographical representation of IMF senior
management positions, including a potential additional DMD. Katz’s
appointment, only further tightens the global North’s grip over the
institution.”

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CONDITIONALITY/Analysis

Beyond loans: The human rights impacts of IMF conditionalities
in Argentina Guest analysis by Julia Gerlo, Fundación Ambiente y
Recursos Naturales

SUMMARY
- IMF programmes, anchored on conditionalities, have kept Argentina
locked in a cycle of crises, debt and adjustment since 2018
- Shrinking of the pension system, public wages, public investment
and social protection policies reveal a creditors first, people and
ecosystems last policy
- The Fund must systematically incorporate distributional impact
assessments of its conditionalities, to measure their real effects on
income inequality, gender and environmental justice

Argentina’s relationship with the International Monetary Fund (IMF)
is one of the most controversial in the institution’s history (see
Observer Summer 2025, Autumn 2019). IMF programmes, anchored on
conditionalities, have kept the country locked in a cycle of crises,
debt and adjustment since 2018. The debate about the implications of
conditionalities has gained urgency in 2025, as the IMF undertakes
the first review of Programme Design and Conditionality (RoC) since
2018 (see Observer Summer 2019). US officials have demanded that the
Fund go ‘back to basics’, focusing on fiscal, monetary, and financial
surveillance, rather than on ‘emerging issues’ such as climate,
gender and inequality. In 2023, Javier Milei – a far-right
climate-denier – won the presidential election, and was mandated by
the IMF to undertake the largest fiscal adjustment in the country’s
history, including a large upfront adjustment of around 5 per cent of
GDP, a highly ambitious goal. It relied on shrinking the public
pension system, public wages, public investment and social protection
policies. Who pays? Austerity shifts the burden of adjustment onto
those least able to bear it. Women, Indigenous Peoples, migrants, and
front-line communities have carried the heaviest costs. Between 2023
and 2025, social spending fell by 17 per cent, marking the lowest
level since 2010, while environmental programmes were gutted – forest
conservation funds were cut by 80 per cent, more than two-thirds of
renewable energy promotion was cut, and fire management capacity was
reduced by over 35 per cent. The closure of the Ministry of Women,
Gender, and Diversity and the dismantling of programmes like
Acompañar and Line 144 left survivors of gender-based violence
without institutional support. The Comprehensive Sexual Education
programme was eliminated, while the “ENIA Plan” for teenage pregnancy
prevention lost over 80 per cent of its funding compared to 2021. In
2025, 13 programmes that depended on funding from the former Ministry
of Women were closed. Cuts to healthcare and education intensified
the demand for unpaid care work – an invisible subsidy extracted from
women to compensate for state retrenchment. Meanwhile, the protection
of payments to creditors contrasts sharply with the erosion of social
protection and climate action. Public debt decreased by 21.2 per
cent, a lower percentage than the general budget and the State
Intelligence Secretariat saw its real budget increase by 19.2 per
cent. This reveals a hierarchy of priorities: creditors first, people
and ecosystems last. By privileging fossil fuel exports, the
IMF-backed programme undermined Argentina’s climate commitments under
the Paris Agreement and accelerated ecological degradation. These
projects are promoted as engines to generate foreign exchange for
debt repayment, yet they entrench Argentina’s fossil fuel dependence
and put vulnerable communities at heightened risk of climate-related
disasters. Promoted as a source of foreign exchange, these extractive
projects – such as fracking in Vaca Muerta – accelerate ecological
degradation and threaten fundamental rights, including access to safe
water and a healthy environment (see Observer Spring 2020). Looking
ahead: The IMF’s review of conditionality The RoC is a key test of
how the institution defines debt ‘sustainability’. The Argentina case
shows why the Fund must systematically incorporate distributional
impact assessments of its conditionalities, to measure their real
effects on income inequality, gender, and environmental justice. This
will require ensuring meaningful participation and transparency and
working alongside the support of specialised UN human rights
divisions, affected communities, and civil society organisations.
Beyond procedural reforms that are within the scope of the RoC, civil
society calls for the elimination of IMF surcharges (see Observer
Autumn 2024), which drain scarce fiscal space from indebted
countries, and a shift toward non-GDP-centered metrics, where
programme success is measured not only by growth rates but also by
indicators of well-being, equality, and ecological balance. New
approaches to debt sustainability are also essential, emphasising
human rights, gender justice and climate considerations, as well as a
comprehensive debt relief framework, including full debt cancellation
for all low- and middle-income countries that require it, and a
permanent UN-based mechanism for preventing and resolving debt
crises. Debt service should be suspended in the event of political,
climatic, environmental, economic, or security shocks, safeguarding
countries from catastrophic financial burdens in times of crisis. In
2023, for example, Argentina faced a drought, which claimed three per
cent of its GDP. The IMF did not modify the debt payments. Without
such shifts, the IMF will again reproduce and deepen the very crises
it claims to solve. Conditionalities that privilege creditors and
fossil capital over people and ecosystems are not a path to
stability, but to deeper inequality and climate vulnerability. The
RoC must acknowledge that macroeconomic stability cannot be built on
the erosion of rights, care systems, and the environment.

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ACCOUNTABILITY/Analysis

IFC Sustainability Review: Overlooking structural issues

SUMMARY
- IFC’s review sidesteps a core issue: IFC’s funding model drives
safe financial bets, over developmental impact and environmental and
social safeguards
- Reliance on financial intermediaries undermines accountability,
prioritising financial mobilisation over community and environmental
welfare
The International Finance Corporation (IFC) – the World Bank’s
private sector arm – has launched its Sustainability Framework review
(see Inside the Institutions, IFC Sustainability Framework Review),
to assess its environmental and social (E&S) Performance Standards
and stakeholder engagement. The process, however, sidelines a more
fundamental concern: the shareholders’ unwillingness to accept loses
inherent in the provision of developmental capital, result in the
subordination of social and environmental goals to the logic of
financial markets. While the IFC publicly frames its mission as
lifting people out of poverty, its own accountability mechanism, the
Compliance Advisor Ombudsman (CAO), has warned that the institution
“continues to put profit first”, particularly in relation to the
IFC’s financial intermediary lending. Constrained by shareholders’
unwillingness to also review its funding model, the IFC has little
room to absorb losses or take on the financial risks central to its
mission. Instead of deploying patient capital in low-income countries
(LICs), IFC’s flows concentrate in safer markets and investments,
often duplicating or even crowding out private finance rather than
catalysing it – in 2018, only $1.22 billion of the $5.64 billion the
IFC mobilised reached LICs. In this way, the IFC is pushed by
institutional constraints into a profit-driven model that undermines
its additionality, weakens developmental impact and increases the
likelihood of environmental and social harm. This tendency is
reinforced in the review by IFC’s growing reliance on private capital
mobilisation (PCM) as a measure of success. By embedding leverage
into its performance indicators, the IFC defines progress where
capital is easiest to mobilise, not where development needs or the
impact of its investments are greatest. This structural issue remains
the elephant in the room - largely unacknowledged, but central to how
the IFC defines and measures success. Market deepening or market
reshaping? Another key issue is how the IFC interprets its role in
“deepening financial markets.” While this can contribute positively
to development, in practice, the IFC often veers towards reshaping
development to fit investor logic by structuring complex
securitisations or funnelling capital through opaque financial
intermediaries. This is alarming given that financial intermediaries
now account for over half of IFC’s portfolio. The review’s
“fit-for-purpose” approach to due diligence compounds this problem,
tailoring oversight to the “scale and complexity” of IFC’s financial
products. More simply, direct loans face stricter oversight, while
the most complex and opaque products – such as securitisations and
intermediary lending – are subject to less rigorous standards. A 2025
CAO Report reviewing 25 financial intermediary investments found
widespread weaknesses in IFC clients’ implementation of E&S standards
at the sub-project level – including poor due diligence, weak action
plans, and limited supervision, yet in most cases, the IFC continued
funding even where compliance was poor. Civil society has long warned
that this structure leaves communities harmed by sub-projects with no
access to IFC accountability mechanisms (see Observer Winter 2023).
Far from being pragmatic, this approach cements a model where the
riskiest products escape scrutiny, undermining accountability and
reinforcing the financialisation of development.

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RIGHTS/News

New investigation highlights harms of for-profit healthcare funded by
IFC-backed private equity group

On August 25, Bloomberg released a second instalment of its
investigation into World Bank Group investments in for-profit
hospitals through its private sector arm, the International Finance
Corporation (IFC). The newest investigation focused on the role of
private equity, specifically US-based firm TPG Inc, whose investors
include the IFC and the Gates Foundation. They support TPG’s RISE
Fund, which has invested in hospitals in low-income countries. The
report compiled research and accounts from whistleblowers to paint a
devastating picture of practices encouraged by TPG in hospitals it
owns, to maximise profits. The report bolsters ongoing calls from
civil society organisations including Oxfam and ISER Uganda for the
IFC to divest from such operations and improve its accountability and
transparency practices, following a similar investigation in July by
the International Consortium of Investigative Journalists. Despite
the wealth of evidence highlighting the ineffectiveness of mobilising
private finance for development (see Observer Summer 2025), the IFC
commented on the report that, “private health care is helping meet
the large demand for health services, a demand that public sector
health care cannot meet on its own.” In fact, IFC has continued to
invest in TPG, as recently as June.

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