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Bretton Woods Observer Winter 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. As Jubilee year draws to a close, debt crisis remains unresolved
2. Second World Summit for Social Development’s Doha declaration:
Ambition must be backed by action
3. World Bank shareholding review must deliver a better deal
for African governments
Guest analysis by Trevor Lwere and Hannah Ryder, Development
Reimagined
4. Senegal’s hidden debt sparks questions about IMF’s oversight
5. World Bank establishes task force to evaluate merger of its
independent accountability mechanisms
6. Securing a role for the private sector: IFC’s first securitisation
transaction aims to mobilise private capital, but at what cost?
7. Legislative pathways to sovereign debt relief: What the IMF gets
wrong – and how to fix it
Guest comment by Karina Patricio Ferreira Lima, University of Leeds,
Celine Tan and Stephen Connelly, University of Warwick
8. IMF’s economic sustainability analyses fail to consider extreme
wealth as macro-risk and address harms
9. Indigenous communities lead protests in Ecuador over
IMF-prescribed austerity and fuel extraction
10. IMF launches review of its civil society engagement strategy amid
increased protests against its policies
11. CAO closure of Tata Mundra case sends chilling message to
project-affected communities in search of justice

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FINANCE/Analysis

As Jubilee year draws to a close, debt crisis remains unresolved

SUMMARY
- Global debt has reached unprecedented levels, exposing systemic
injustices that make borrowing costlier and riskier for developing
countries 
- FfD4 fell short of a reset but centred debt justice
within UN agenda 
- Private creditors, despite their growing
dominance, remain largely outside multilateral debt-restructuring
mechanisms

Debt is a systemic issue rooted in currency hierarchies and colonial
dynamics, and simultaneously intertwined with climate vulnerability,
inequality and unjust multilateral governance (see Observer Autumn
2022). Global sovereign debt has reached unprecedented levels, now
exceeding 235 per cent of world GDP. Two-thirds of low-income
countries are either in or near debt distress, while advanced
economies are carrying their highest public debt since the Napoleonic
Wars. Against this backdrop, 2025 has become pivotal for debt
justice. With the Catholic Church’s Jubilee year coinciding with the
Fourth International Conference on Financing for Development (FfD4),
global attention returned to the principles of Jubilee 2000: debt as
a moral and structural issue, and the need for periodic relief to
restore fairness and dignity. Yet today’s debt architecture falls far
short. The G20 Common Framework, debt swaps and climate-linked bonds
largely protect creditor interests. At the centre stands the IMF,
whose conditionality and debt sustainability assessments undermine
economic sovereignty and contribute to cyclical debt crises. As Tim
Jones of UK-based civil society organisation (CSO) Debt Justice
notes, “the combination of IMF and World Bank loans, and public
spending cuts, allow the debt to keep being paid, but at huge cost.
Debt cancellation is urgently needed to prevent this crisis becoming
a disaster for poverty and human rights.” The experiences of Zambia
and Ghana highlight this dysfunction. Both were beneficiaries of the
Heavily Indebted Poor Countries Initiative (HIPC), yet both defaulted
again in 2020 and 2022 respectively. Their return to crisis
demonstrates that the austerity policies mandated by the IMF and
World Bank, and the inequities of the international financial
architecture, including the higher costs of borrowing for low- and
middle-income countries continue to reproduce the vulnerabilities the
2000 Jubilee sought
to end. The treatment of Global South countries contrasts with that
of the Global North during times of crisis. The 1953 London Agreement
halved West Germany’s external debt and stretched repayments over
decades on favourable, growth-linked terms. Yet, even contemporary
reflections shy away from these historical facts: the Jubilee
Commission report avoids calling for comprehensive debt cancellation,
underscoring how far global discourse has drifted from the boldness
of Jubilee’s vision 25 years ago. From ambition to reality: the FfD4
commitments on debt While the outcome document of FfD4, the
Compromiso de Sevilla, did not deliver the full reset many had
demanded, it nonetheless created political space for progress.
Advanced economies – led by the EU – blocked a UN Framework
Convention on Sovereign Debt. However, the strong advocacy of civil
society organisations (CSOs), the Africa Group and Alliance of Small
Island States, secured an intergovernmental process, ensuring that
debt reform remains on the UN agenda and opening the door to more
ambitious steps in future negotiations. Other emerging opportunities
include the formation of a borrowers’ club, co-led by Zambia and
Egypt with UNCTAD support, which aims to strengthen negotiation
capacity, share analytical tools, and advance common principles for
fair restructuring – signalling a step in the right direction.
Equally significant was the decision to bring credit rating agencies
(CRAs) formally into the UN Financing for Development process through
a high-level meeting on sovereign ratings. While CSOs demands for a
public UN credit rating agency remain unfulfilled, this marks the
first time the UN has created a mechanism for CRAs – long criticised
for their pro-cyclical downgrades, lack of transparency, and
disproportionate influence on borrowing costs. CRA assessments shape
the cost of capital for countries, often worsening stress when
downgrades hit during crises. Crucially, these ratings and the IMF’s
Debt Sustainability Assessments (DSAs) influence and reinforce each
other: once the Fund signals vulnerability, CRAs tend to downgrade,
raising interest rates and reinforcing the very risks they identify.
This procyclical dynamic is exactly what the IMF’s ongoing review of
its Low-Income Country Debt Sustainability Framework (LIC DSF; see
Inside Institutions, What is the World Bank & IMF debt sustainability
framework for low-income countries?) must confront. The framework’s
limited early-warning capacity and failure to account for market
reactions mean that distress is recognised only once crisis has fully
taken hold. The IMF concedes debt relief has often been “too little,
too late” but defends caution to preserve market access. Yet evidence
shows that pre-emptive restructurings produce far better outcomes –
i.e., shorter crises and fewer defaults. Private creditors: the
missing pillar in the global debt architecture As the multilateral
system struggles to deliver meaningful reform, the private sector
remains the missing piece of the global debt puzzle, now holding over
60 per cent of low- and middle-income countries’ external debt.
Without binding rules for private participation, multilateral
initiatives risk being undermined by creditor resistance – rooted in
an IMF-centred model that prioritises market access and investor
confidence, setting the “rules of the game” in which private
creditors wield disproportionate leverage (see Observer Summer 2025).
In this context, the 2023 New York Sovereign Debt Stability Act was
hailed as a landmark reform to bring fairness and predictability to
debt workouts, yet the bill stalled under financial-sector pressure,
mirroring the UK’s hesitation over similar reforms. Instead, new
initiatives are rising, like the London Coalition on Sustainable
Sovereign Debt, aimed at bringing together governments, investors,
and private creditors under “enhanced coordination.” Yet, as Debt
Justice noted, this is “a coalition of creditors, not a coalition for
debt justice.” Relying on voluntary engagement and market-based
principles, it reaffirms creditor dominance rather than challenging
it. “In 2026, the debt movement enters the UN arena as countries and
civil society push for fair, enforceable rules. However, dialogue
without binding obligations, risks entrenching power imbalances. For
Jubilee principles to take hold, private creditors must be bound,
systemic IMF–World Bank reform prioritised, and debt cancellation
placed at the centre of global debate,” said Iolanda Fresnillo of
Belgium-based CSO Eurodad.

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RIGHTS/News

The World Summit for Social Development – the second meeting of UN
member states and stakeholders to tackle social issues, poverty,
inclusion and jobs – was held in Doha from 4-6 November. The
commitments of the first summit held in Copenhagen 30 years ago
remain unrealised, with an estimated $4 trillion per year needed for
developing countries to achieve the Sustainable Development Goals
(SDGs) by 2030. During the Summit the Global Call to Action against
Poverty (GCAP) campaign released a ‘people’s declaration’ calling for
transformation of the international financial architecture and an end
to austerity, and over 100 civil society organisations called for
commitments on social spending for public services. The Summit’s Doha
declaration includes commitments on social protection, care economies
and ending inequality, and reiterates the centrality of human rights
and labour rights. Its ambition was lauded as a success for
multilateralism in an increasingly fractured geopolitical context.
Yet, as President William Ruto of Kenya speaking for the African
Group argued, pledges on inequality must involve urgent action on the
debt crisis, including a UN Framework Convention on Sovereign Debt
and international cooperation on tax. The ambition of the Doha
declaration is a step forward but as Isabel Ortiz, Director of the
international think tank Global Social Justice, argued in an op-ed
for Inter Press Service, austerity policies which undermine the
social contract and aspirations of the Doha declaration are a
political choice, which need to be challenged to ensure that its
pledges are realised.

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IFI GOVERNANCE/Guest Analysis

World Bank shareholding review must deliver a better deal
for African governments
Guest analysis by Trevor Lwere and Hannah Ryder, Development
Reimagined

SUMMARY:
- 2025 World Bank Shareholding Review offers a key chance to correct
persistent governance imbalances that favour high-income countries
- African constituencies face disproportionate membership, limited
staffing and structural constraints
- Civil society calls for stronger borrower influence, more African
chairs and decision-making reforms

The World Bank was created as a financial cooperative to support
postwar reconstruction and later expanded to provide development
financing to countries with limited access to private markets.
Because its founding relied on capital guarantees from a few rich
countries, its governance was designed to reflect each member’s
economic weight. This logic persists: high-income countries hold over
60 per cent of voting power, with the United States alone enjoying
more than 15 per cent and effective veto authority (see Inside the
Institutions, IMF and World Bank decision-making and governance). The
ongoing 2025 Shareholding Review – held every five years – offers the
Bank a chance to ensure its governance still reflects the global
economy and the needs of its members. But the current review unfolds
amid a broader crisis of multilateralism, shaped by geopolitical
fragmentation and longstanding imbalances in the international
financial system that collective action has repeatedly failed to
resolve. Although the distribution of voting shares has shifted
incrementally over the decades, the underlying hierarchy has remained
intact. Attempts to rebalance representation have yielded limited
results. The 2010 Shareholding Review resulted in voice reforms that
shifted a modest share of votes to developing and transition
countries, but the inclusion of several high-income economies within
that category diluted the intended effect. Meanwhile, proposals that
rely on expanding “basic votes” – the equal votes allocated to each
member regardless of economic size – have tended to be too modest to
alter the balance of power. Basic votes account for only 5.5 per cent
of total voting power, and even doubling or tripling this share would
leave the overwhelming majority of votes tied to capital
subscriptions dominated by high-income countries. Lopsided
constituencies leave African governments under-represented This
broader imbalance is mirrored in the day-to-day functioning of the
Bank’s board, where African executive directors (EDs) face layers of
structural, procedural and administrative constraints that limit
their ability to represent their constituencies effectively. Unlike
their counterparts from high-income countries, who often represent a
single country with deep technical ministries behind them, African
EDs must speak for as many as 20 to 24 countries. The first African
executive director (EDS 13), currently from Cabo Verde, represents 23
countries. The second African ED (EDS 14), currently from Tanzania,
represents 22 countries. On the other hand, EDS 25, currently from
Nigeria, represents only three countries: Angola, Nigeria and South
Africa. This creates enormous coordination burdens: capital
consultations take longer, priorities are harder to reconcile, and
infrequent rotation into ED seats slows internal negotiations. Yet ED
offices face fixed staffing ceilings that don’t adjust to
constituency size, leaving African EDs to review dozens of complex
documents under the same tight deadlines as EDs with only a few
countries. Bank procedures governing meeting access, document review
and preparation timelines were never designed for representatives
managing such extensive constituencies. For EDs representing 20 or
more countries, these rules function as structural constraints that
compress limited capacity, restrict meaningful engagement and mute
the voices of those most reliant on the Bank. The result is a chronic
shortage of time, voice and strategic bandwidth for African EDs –
those who should have the strongest say. These inequities extend
beyond Africa to regions like Asia, where populous countries like
Bangladesh, Nepal and Sri Lanka share one ED while Japan holds its
own. The same is true for Latin America and the Caribbean, where
small island states are grouped with much larger economies. Such
mismatches reveal a systemic governance problem across the Bank, even
if it is most acute and consequential in Africa. A new path to fairer
governance Rebalancing the World Bank’s governance will require more
than technical adjustments – it demands a reframing of whose
perspectives and experiences are treated as central to global
development decision-making – and the current Shareholding Review
represents an opportunity to do that (see Inside the Institutions,
The World Bank shareholding review – reform or ritual?). A more
representative system could rest on three shifts. First, the Bank
must move toward voting arrangements that give borrowers real
influence. A more balanced mix of share and membership-based votes,
with parity between borrower and creditor countries, would help align
decisions with the priorities of those whose development trajectories
are most affected. Second, Africa’s underrepresentation should be
addressed by adding more African chairs; reducing constituency sizes
from over 20 countries to around 10 or 12 would significantly improve
consultation and responsiveness. Third, for policies affecting
borrowers, a double-majority system – requiring approval by overall
voting power and by a majority of borrowing members – would ensure
those most exposed to Bank lending have a decisive say. The proposed
reforms would enhance the Bank’s legitimacy and effectiveness and
make it more fit for purpose in our contemporary world.

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FINANCE/News

Senegal’s hidden debt sparks questions about IMF’s oversight

SUMMARY
- IMF missed elevated level of debt despite its involvement in the
country since 2019
- Levels of underestimated debt only the “tip of the iceberg”, as IMF
misses other key data in previous projections

Senegal is facing unforeseen elevated debt problems, sparked by the
country’s Court of Auditors March report documenting that it had
taken on undisclosed loans equivalent to 25 per cent of its GDP
between 2019 and 2024. Although Senegal has been under several IMF
programmes since 2019, the substantial additional borrowing was
apparently not uncovered by the Fund. According to International
Development Economics Associates (IDEAs), a July 2024 public audit
found Senegal’s public debt at the end of 2023 was 99 per cent of GDP
– while earlier in the year the government had reported 74 per cent
debt-to-GDP ratio. Afroeconomics Law highlighted in October that debt
rose to 110 per cent of GDP in 2024, and up to 118 per cent at the
end of the year. The IMF has suggested this discrepancy was due to
misreporting from the Government of Senegal. However, IDEAs stressed
that the oversight poses questions about the IMF’s quality control,
with the Fund missing various opportunities to identify the issue,
“in mission after mission over five years…in the balance of payments,
in the monetary survey, in the national accounts, and, of course, in
the fiscal accounts.” The IMF suspended its $1.8bn credit facility to
Senegal in 2024, following the audit findings. Senegal’s
underestimated debt is only the “tip of the iceberg” IDEAs had
previously found major errors in the IMF’s October 2024 World
Economic Outlook projections for Senegal, particularly on inflation,
where the Fund forecast increases for Senegal far above its own
global estimate of 2 per cent (–13.4 and 41.9 per cent for 2025 and
2026, respectively). IDEAs claimed that the fact that the IMF was
getting a core macroeconomic indicator like inflation so wrong over
such a short period was just the “tip of the iceberg”. It noted that
IMF’s numerical miscalculations – which in some cases have driven
overly optimistic Debt Sustainability Analyses (see Inside the
Institutions, What is the World Bank & IMF debt sustainability
framework for low-income countries?) – have led to inappropriate
conditionality being imposed in other countries in Africa, as seen in
the most recent IMF programme review for Kenya (see Observer Autumn
2024, Autumn 2023). Senegal’s Parliament recently committed to
recognise this undisclosed debt as part of an omnibus fiscal bill.
However, no steps have been agreed to determine how Senegal has got
to this point nor to assess its implications for IMF global
operations and systems. According to a 9 November Reuters article,
the current government has blamed this hidden debt on its
predecessor. Prime Minister Ousmane Sonko noted his opposition to a
potential debt restructure once the ongoing IMF debt sustainability
assessment has been finalised, noting it “would be a disgrace for
Senegal,” as seen in other cases across the African continent (see
Observer Spring 2025; Dispatch Springs 2023). In August, Sonko
announced a new economic recovery plan for Senegal, pledging to
finance 90 per cent of the initiative through domestic resources and
avoid additional debt. Conversations between the government and the
IMF on the country’s options for debt restructuring are still
ongoing.

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ACCOUNTABILITY/News

World Bank establishes task force to evaluate merger of its
independent accountability mechanisms

News that the World Bank executive board is considering merging the
Bank’s two independent accountability mechanisms (IAMs) – the
Accountability Mechanism, which serves the International Bank for
Reconstruction and Development and International Development
Association (the Bank’s public arms), and the Compliance Advisor
Ombudsman (CAO), which serves the International Finance Corporation
and Multilateral Investment Guarantee Agency (the Bank’s private
sector arms) – has heightened fears of further erosion of a system in
dire need of improvement (see page 10; Observer Winter 2024, Winter
2023). As reported by development news outlet Devex in October, the
proposed merger is part of World Bank President Ajay Banga’s efforts
to “make the lender ‘smarter, faster, and more responsive,’ and to
streamline overlapping functions across its public and private-sector
arms.” The potential dangers and benefits of the merger were explored
during the Annual Meetings at a Civil Society Policy Forum panel (see
Dispatch Annuals 2025). At the Meetings, civil society groups were
informed that the executive board has commissioned a task force to
examine whether to undertake the merger and, if so, how it should be
done. “This process should result in a stronger accountability system
that more effectively addresses harms from World Bank Group projects
and restores livelihoods,” argues Stephanie Amoako, Policy Director
at US-based Accountability Counsel. The executive board will
reportedly consider the task force’s approach paper in mid-December,
with its final recommendations expected by May 2026. The Bank has
also informed civil society that there will be public consultations
in the new year as a part of the process and that the task force will
convene a “reference group” of stakeholders, including civil society
organisations, to discuss various topics.

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PRIVATE SECTOR/Analysis

Securing a role for the private sector: IFC’s first securitisation
transaction aims to mobilise private capital, but at what cost?

SUMARY
- The IFC has made its first ever securitisation transaction,
comprising a $510 million collateralised loan obligation backed by 57
private sector loans
- Operation increases IFC lending capacity, but questions about
development impact remain

The International Finance Corporation (IFC), the World Bank Group’s
(WBG) private sector arm, has made its first ever securitisation
transaction, under a new model that aims to “attract institutional
private capital into emerging markets,” using an
originate-to-distribute model specifically for emerging market
investments. In late September, ahead of the October World Bank and
IMF Annual Meetings held in Washington DC, the Bank issued a
statement announcing the closing of a $510 million collateralised
loan obligation (CLO) backed by 57 private sector loans (which are
packaged together and sold in tranches). World Bank President Ajay
Banga recently told the Financial Times that he intended this to be
the start of regular offloads of its loans to private investors,
noting that “the amount of private capital flowing into emerging
markets has not shown the promise of billions to trillions,” despite
the Bank’s previous promises (see page 4). The process of
securitisation, whereby loans (in this case, IFC originated loans)
are pooled and repackaged into marketable securities, is intended to
increase the IFC’s lending capacity and bring more private sector
investors to emerging markets by creating a new asset class, which
meets institutional investment standards. Under the leadership of
Banga – a former CEO at Mastercard – and amid widespread cuts to
Official Development Assistance (ODA), the Bank has tasked itself
with finding new ways to mobilise private capital and increase
financing options for its work. Development impact at risk Unlike the
typical derisking model that sees development banks and states assume
risk on behalf of the private sector – for which the Bank has its
dedicated Multilateral Investment Guarantee Agency (MIGA) arm (see
Observer Autumn 2017) – securitisation can free up capital and
balance sheets to create additional capacity for lending, and
potentially remove risk – since assets are transferred – although
Banga has noted that removing risk was not the primary purpose. A
2019 report by Professor Daniela Gabor, Securitization for Sustainability,highlighted that such a model of financing quickly becomes murky and opaque when global and shadow banks become involved, which is especially salient under the IFC’s model of development that has been challenged by Bank watchers for years for prioritising profitability over developmental impact. This comes amidst fears for the future of accountability mechanisms at the World Bank, with the ongoing possibility that the WBG’s Independent Accountability Mechanism and IFC and MIGA’s Compliance Advisor Ombudsman may be merged (see page 4). 
Same but different, at a time when international financial
institutions are being scrutinised for the role they play in
development and in the global financial architecture (see Dispatch
Annuals 2025), the Bank’s latest move to mobilise private finance
will undoubtedly be met with scepticism regarding its value to
achieving development objectives such as the Sustainable Development
Goals (SDGs), and indeed economic transformation. Others have also
questioned the difference between privatisation and securitisation,
when both require public entities to surrender control over assets.
While groups such as the Group of 24 provided vocal support for the
announcement, Gabor’s report queries whether securitisation as a
derisking instrument would be conducive to achieving the SDGs, and
concluded that, under the Wall Street Consensus (which sees
international development as an opportunity for global finance
profits), potential gains from selling development finance loans to
markets are “overstated, while the costs – in terms of structural
changes in the financial sector, (de facto) privatization of public
services through public-private partnerships (PPPs) and the narrowing
of policy space for a green developmental state – are downplayed.”

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FINANCE/Guest comment

Legislative pathways to sovereign debt relief: What the IMF gets
wrong – and how to fix it
Guest comment by Karina Patricio Ferreira Lima, University of Leeds,
Celine Tan and Stephen Connelly, University of Warwick

SUMMARY
- UK’s proposed Debt Relief (Developing Countries) Bill would cap
creditor recoveries within UK jurisdiction
- IMF’s suggestion creditors might respond by changing governing law
is misplaced, as cap applies regardless of governing law
- IMF warning that enforcement legislation may raise borrowing costs
or damage financial centres has no empirical basis

In its September 2025 Stocktaking of the Current International
Architecture for Resolving Sovereign Debt Involving Private Sector
Creditors, the International Monetary Fund (IMF) offers a timely
review of an increasingly complex sovereign debt landscape. Although
government debt levels in emerging markets (EMs) and low-income
countries (LICs) stabilised between 2020 and 2024, risks linked to
privately held debt remain elevated, and restructurings are taking
longer to conclude than those examined in the IMF’s 2020 stocktake.
The report surveys contractual and legislative tools intended to make
sovereign debt restructurings more effective, yet it misses a central
point: contractual tools alone cannot fix the coordination failures
that define contemporary sovereign debt workouts. As debt profiles
have become more heterogeneous, tools such as collective action
clauses (CACs) can only do limited work. They can facilitate
amendments to key financial terms if relevant bondholder majorities
agree, but they cannot aggregate across different debt instruments.
This fragmentation is a major reason why restructurings are more
complex today (see Observer Spring 2025). These limits make the IMF’s
discussion of legislative tools especially important. However, the
report treats fundamentally different proposals as equivalent,
implying they may trigger governing law arbitrage by prompting
creditors to amend contracts to avoid their application, obscuring
the distinct purposes of different legislative approaches. Two
distinct legislative approaches The legislative proposals identified
by the IMF fall into two categories. The first consists of
substantive contract law interventions, which directly modify
creditors’ rights or establish a mandatory statutory restructuring
process. New York’s proposed Senate Bill S2333, for example, would
introduce a domestic majority-voting for sovereign restructurings
that binds all holders of instruments governed by New York law, thus
directly altering rights and obligations written into existing
contracts governed by New York law. The second category targets
enforcement. It does not alter contractual rights and obligations.
Instead, it limits creditor recovery through domestic courts if the
debtor has undergone a multilateral debt treatment. Examples include
the UK’s Debt Relief (Developing Countries) Act 2010, the proposed
Debt Relief (Developing Countries) Bill, and New York’s proposed
Senate Bill S7458. Under this model, a creditor may obtain a judgment
for the full value of the claim, but recovery in the jurisdiction of
enforcement is capped at levels consistent with multilateral
restructuring – regardless of governing law. Both categories promote
inter-creditor equity, but do so through distinct legal mechanisms,
creating different incentives for debtors and creditors. The IMF
blurs these lines, leading to misplaced assumptions about what these
reforms can achieve. What the UK Bill actually does The UK’s proposed
Debt Relief (Developing Countries) Bill does not amend or override
contractual rights, nor does it reduce the nominal value of any debt.
It operates exclusively within the enforcement jurisdiction of UK
courts, ensuring they – and financial infrastructure subject to their
authority – cannot be used to undermine policies the UK endorses
internationally. The Bill would cap creditor recoveries in the UK at
levels consistent with designated multilateral debt treatments,
including the G20 Common Framework (see page 1-2; Observer Summer
2025). This would prevent non-participating creditors from exploiting
UK enforcement channels to extract preferential recoveries at the
expense of participating creditors and debtor states. This is not
only a matter of legal coherence but also of public accountability.
Every public dollar written off in a multilateral restructuring
becomes a dollar available to a non-participating creditor if
financial centres allow full recovery. At a time of declining
official development assistance and renewed fiscal austerity, such
implicit subsidies are increasingly difficult to justify. As the Bill
regulates enforcement not contractual rights, the IMF’s suggestion
that creditors might respond by changing the governing law of their
instruments is misplaced. If enforcement is sought in the UK, the
statutory cap applies regardless of the governing law. Changing
governing law would deprive creditors of the predictability of
English law while offering no practical advantage. What matters for
enforcement is not governing law but the location of attachable
assets. As a major financial hub, London hosts the paying agents,
trustees, and financial institutions on which many sovereign bond
issuances depend. This create jurisdictional hooks that bring
enforcement actions to UK courts, and creditors cannot easily forego
them without significant operational and legal risk. The IMF warns
that enforcement legislation may raise borrowing costs or damage
financial centres, but there is little evidence to support this.
Following the UK’s 2010 Act, private lending to the 36 countries
covered by the legislation increased from $3 billion in 2005-2009 to
$24 billion in 2010-2014 and $41 billion in 2015-2019. A 2011 UK
Government review found no evidence that the Act harmed London’s
status as a financial centre or constrained access to credit. We
encourage the IMF to focus on the real determinants of legislative
impact: the geography of international payment systems, the location
of assets subject to enforcement, and the benefits of coordinated
adoption across major financial centres.

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FINANCE/Analysis

IMF’s economic sustainability analyses fail to consider extreme
wealth as macro-risk and address harms

SUMMARY
- New Economics Foundation research demonstrates harmful consequences
of extreme levels of capital accumulation and concentration of wealth
at domestic and global levels
- IMF surveillance should analyse the consequences of extreme wealth
in order to address risks including rising inequality

The IMF’s ongoing Comprehensive Surveillance Review (see Dispatch
Annuals 2025; Observer Summer 2025) seeks to assess how the
institution has dealt with questions of economic sustainability and
risk in the advice it has presented to its member states particularly
through bilateral (IMF to country) Article IV surveillance – yearly
reports on a country’s economic status (see Inside the Institutions,
IMF Surveillance). However, an issue that the Fund has so far not
included in its analyses is extreme wealth. Extreme levels of
accumulation and concentration of wealth underlie the economic
instability many countries are facing, which is manifested through
increasing global economic volatility. A June report by Oxfam, for
example, revealed that in 2025 over half the world’s population (3.7
billion people) live in poverty while the richest one per cent have
gained $33.9 trillion of wealth in real terms over the past 15 years.
As argued in an October Civil Society Policy Forum (CSPF) session
during the World Bank and IMF Annual Meetings, inequality and extreme
wealth drive real economic harms such as inflation, housing
unaffordability and homelessness, and enables political control by
unelected elites, weakening democratic institutions through political
donations, lobbying and media capture. A September 2024 report by the
Good Ancestor Movement and Patriotic Millionaires stated, “Not only
does extreme wealth not lift others up, it poses significant risks to
the economy through disproportionately concentrating power,
destabilising and distorting market dynamics, and stagnating growth.”
Extreme wealth in Fund surveillance Fund surveillance reports base
their analysis of a country’s economic health on its overall economic
stability and growth measured in GDP terms. However, GDP as a metric
is blind to the harmful ecological and human effects of growth by any
means, and is demonstrably insufficient for identifying economic risk
factors associated with rising inequality. These can be revealed by
including data on an extreme wealth line, a point at which wealth
becomes so concentrated that it presents a risk both domestically and
globally – from treating health and education, rights to water, and
housing as vehicles for profit generation, rather than as human
rights or services that exist for the public good, to spillover
effects such as capital flight, offshore holdings, or tax evasion.
While the Fund increasingly identifies rising inequality as a risk
factor, its policy prescriptions fail to integrate solutions capable
of addressing the harms resulting from extreme wealth accumulation
(see Briefing, Brace for impact: Social and gender inequalities in
IMF surveillance). Fernanda Balata of UK-based think tank New
Economics Foundation (NEF) argues that, “Inequalities persist partly
because the Fund’s analysis remains centred on income inequality,
despite extensive evidence that wealth inequality – and in particular
wealth concentration within the top 1% – generates far greater
systemic distortions.” Research by NEF, as part of the Extreme Wealth
Line Initiative, “finds that new policy tools are required to measure
and assess the resulting risks to democracy, economic resilience, and
social justice,” Balata said. She added, “Integrating an Extreme
Wealth Line into IMF surveillance – complementing indicators such as
wealth and income Gini coefficients – would allow clearer
identification of macroeconomic and political vulnerabilities,
including capital flight, offshore accumulation, fiscal erosion, and
democratic fragility.” Such an approach would strengthen the Fund’s
capacity to assess economic sustainability and resilience and would
support more coherent policy advice and other tools needed to curb
harmful concentrations of wealth.

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ENVIRONMENT/Analysis

Call for just transition becomes COP30 rallying cry, as doubts remain
over MDBs’ growing climate finance role

SUMMARY
- MDBs re-affirm commitment to provide $120 billion in climate finance
to LMICs by 2030, amid continued civil society scepticism
- Global South unions call for ‘clean break’ with World Bank’s
‘billions to trillions’ approach in the energy sector
- Differing trajectories of Bank-hosted TFFF and Fund for Responding
to Loss and Damage illustrate extent of climate finance provision gap

Amid warnings from the UNEP 2025 Emissions Gap Report that the world
is heading for 2.3-2.5°C of warming above pre-industrial levels by
mid-century, countries laboured to agree a new ‘global mutirão’
decision text at the UN Framework Convention on Climate Change’s
(UNFCCC) 30th Conference of Parties (COP30), held in Belém, Brazil,
from 10-22 November. With dwindling public finance commitments from
traditional donors amid overall cutbacks in aid financing and the US
skipping COP30 altogether, multilateral development bank (MDB)-led
efforts to mobilise private finance remained a de facto pillar of the
mutirão. Strong disagreement on the inclusion of ‘roadmaps’ to
transition away from fossil fuels and end deforestation could not be
overcome, as both were omitted from the final agreement. The Baku to
Belém Roadmap to 1.3T, co-produced by COP30 president Brazil and
COP29 president Azerbaijan, and published on 5 November, focused on
efforts to mobilise $1.3 trillion annually for low- and middle-income
countries’ climate action by 2035, with at least $300 billion coming
from public sources. Despite identifying a range of potential
instruments, including a “manyfold” increase in grant finance and a
new issuance of IMF Special Drawing Rights by 2027 (see Observer
Summer 2024), an over-arching thrust of the Roadmap focused on
mobilising private finance, including through MDBs’ use of junior
equity, guarantees, local currency lending, foreign exchange hedging
tools, and securitisation platforms (see page 5). Although the
presence of MDBs in Belém was somewhat muted in comparison to COP29,
the MDBs released a joint statement on 11 November re-affirming past
commitments to work more closely on climate, including through
leveraging private finance. The statement noted that in 2024 MDBs
provided $85 billion in climate finance to low- and middle-income
countries and mobilised a further $33 billion in private capital,
“putting MDBs on pace to reach $120 billion from MDBs’ own account
and $65 billion in private capital mobilization by 2030.” However,
civil society has repeatedly scrutinised the MDBs’ approach to
climate finance, and, in its reaction to COP30, the Big Shift Global
coalition argued that, “Global North countries can’t hide behind MDBs
to evade their responsibility to pay their fair share on fair terms
for climate action” (see Dispatch Annuals 2025; Observer Winter
2024). As COP30 turns focus to achieving just transition, unions
reject World Bank’s private finance-led approach Among the major
achievements of COP30 was the creation of a UNFCCC-based Just
Transition Work Programme – commonly known as the Belém Action
Mechanism (BAM) – to provide a centralised hub to support just
transitions around the world. Climate Action Network International
hailed the establishment of the BAM, saying, “The Just Transition
mechanism stands as the major achievement of COP30 and for workers
and communities across the world.” On 21 November, 24 countries, led
by Colombia and the Netherlands, announced the first-ever
international conference on a just transition away from fossil fuels,
to take place in Colombia on 28-29 April 2026, which will address,
inter alia, the “fiscal, social, and macroeconomic challenges of the
transition” (see Observer Autumn 2021). In parallel, the World Bank
co-launched yet another ‘roadmap’ with the UK-based Green Finance
Institute on 14 November, entitled High Quality Energy Investment
Planning Roadmap: Attracting Private Finance at Scale, which is
envisaged as a ‘green-print’ to help developing countries undertake
de-risking of clean energy projects to attract private investors (see
Briefing, Gambling with the planet’s future?). However, this approach
was rejected in a statement at COP30 from over 100 trade unions from
the Global South, representing tens of millions of workers – the
would-be beneficiaries of the Bank’s new ‘jobs agenda’ (see Dispatch
Annuals 2025) – who argued, “There needs to be a clean break with the
policy of ‘blended finance’ and ‘de-risking’. The World Bank’s
‘billions to trillions’ idea that public money would ‘catalyse’ large
amounts of private sector finance has been an unqualified failure,
and must be clearly rejected.” A tale of two World Bank-hosted funds:
TFFF and Fund for Responding to Loss & Damage Brazil launched the new
Tropical Forest Forever Facility (TFFF) at the COP30 leaders’ summit
on 6 November. The TFFF, for which the World Bank will serve as an
interim host and trustee, is the latest financing mechanism that
attempts to utilise financial markets to benefit climate efforts – a
paradigm that has a decidedly underwhelming track record (see
Observer Autumn 2024). It seeks to mobilise $25 billion in funds from
‘sponsor’ governments and philanthropies and another $100 billion
from private investors, to create a sovereign wealth fund for forests
that will seek to repay investors and generate financing for
countries who preserve forest cover. However, the TFFF launched with
$5.59 billion in pledges – far below the level needed to generate
adequate funds for forest preservation in 74 potentially eligible
countries. Meanwhile, the Bank-hosted Fund for Responding to Loss and
Damage (FRLD), first agreed at COP26, launched a call for funding
requests on 10 November for its Barbados Implementation Modalities
(see Observer Winter 2023). Brandon Wu of ActionAid USA noted the
$250 million thus far available to entities via the FRLD is a “drop
in the bucket compared to the trillions needed.” The civil
society-led Loss and Damage Collaboration called for a stepwise
increase to address growing economic and non-economic loss and damage
from climate change in developing countries, asking for parties to
fill “the Fund with at least 400 billion USD a year by 2030” – a
figure that illustrates the yawning gap between financing needs and
Northern countries’ current political will.

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CONDITIONALITY/Analysis

Indigenous communities lead protests in Ecuador over IMF-prescribed
austerity and fuel extraction

SUMMARY
- IMF approved a 48-month loan programme for Ecuador in May 2024 that
requires strict austerity measures to keep debt “sustainable”
- These measures, including diesel subsidy cuts and increased fuel
extraction, triggered mass protests and were met with violent
repression

On 18 September, Ecuador’s largest Indigenous organisation, the
Confederation of Indigenous Nationalities of Ecuador (CONAIE),
launched a month-long strike against President Daniel Noboa’s
far-right austerity programme, which is being implemented as part of
a $5 billion 48-month Extended Fund Facility (EFF) IMF loan approved
in May 2024 – the country’s third IMF programme since 2019. The IMF
is providing the loan under its Exceptional Access Policy (EAP),
which allows borrowing above normal limits (see Observer Spring
2025), using the justification that Ecuador’s debt – 53.8 per cent of
GDP in 2024 – is sustainable but “not with high probability”. The IMF
noted that this assessment is “finely balanced”, depending on the
“implementation of the proposed fiscal consolidation path and
reforms” under the current EFF arrangement, which aims to reduce debt
to 40 per cent of GDP by 2031. The Fund’s Independent Evaluation
Office highlighted in April that EAP programmes often involve overly
optimistic debt and macroeconomic projections, where “Fund access
effectively becomes a substitute for necessary [debt] restructuring”
(see Observer Spring 2025). In practice, this pushes countries toward
deeper austerity – with civil society organisations (CSOs)
criticising the Fund for avoiding “unsustainable” debt labels that
could trigger restructuring, and instead rely on fiscal consolidation
to generate short-term revenue (see Observer Autumn 2022). In its
July review, the Fund noted that Noboa’s government had pursued
austerity more intensely than anticipated, arguing that “the
authorities were able to mobilize non-oil revenue and implement
significant reforms, including a landmark three-percentage-point
increase in the VAT rate [from 12 to 15 percent] and the alignment of
domestic gasoline prices with international prices.” Diesel subsidy
removal triggers mass protests The elimination of the diesel subsidy
was also a precondition for accessing a $900 million Development
Policy Financing (DPF) loan from the World Bank, approved in late
November (see Inside the Institutions, What is Development Policy
Financing?). Implemented on 12 September, this measure directly
triggered the protests, as diesel prices rose by 55 per cent. The IMF
argued in its third review of the EFF in October that subsidies
“disproportionately benefit many who do not need the support,
encourage over-consumption of fossil fuels, undermine the energy
transition, [and] damage the environment.” However, according to a 16
September piece in the People’s Dispatch, CONAIE argued that “the
elimination of the diesel subsidy will affect millions of families,
peasant production, and community transportation, making the basic
basket more expensive and further precarizing [sic] the lives of
popular sectors.” Compounding concerns, the EFF arrangement also
calls for measures to “boost oil production, enhance the oil refinery
system, and promote the gas sector,” as well as for mining expansion,
which Indigenous organisations warn would take place on their
ancestral lands without consent. On 17 October, Indigenous
organisations delivered a letter to IMF Managing Director Kristalina
Georgieva, stating: “Now your IMF loans demand Ecuador extract more
oil to repay debt, so the government must silence us first,”
highlighting that the government had frozen the bank accounts of
Indigenous organisations that have historically defended these
territories in an effort to suppress resistance. Oscar Soria,
co-founder and co-director of The Common Initiative, a think tank
focused on environmental and economic justice, argues that, “The
IMF’s Ecuador programme perfectly illustrates how debt sustainability
assessments become tools for extractive intensification. By labelling
debt ‘sustainable but not with high probability,’ the Fund forces
governments into a bind: implement harsh austerity and expand oil
extraction, or face default. Indigenous communities pay the price for
this financial engineering.”

=====================================================================

CONDITIONALITY/News

IMF launches review of its civil society engagement strategy amid
increased protests against its policies

In October, the IMF announced it had opened a public consultation,
closing on 13 January 2026, on the review of its 2015 Guidelines on
the IMF Staff Engagement with Civil Society Organisations (CSOs). The
review aims to “take stock of developments since [the] guidelines
were published in 2015…[and] consider…how we, at the IMF, can best
engage with the CSO community at the country, regional and global
level.” The review follows long-standing civil society pressure for
improved engagement, including a September 2024 CSO letter demanding
a review of the 2015 guidelines (see Observer Autumn 2024). The
review takes place in the context of growing social and political
instability and grassroot protests against IMF-mandated or supported
austerity (see Observer Autumn 2025, Winter 2024, Summer 2021), with
two key IMF policy reviews underway (see Observer Autumn 2025, Summer
2025). The IMF has long recognised what The Economist magazine in
June 2024 called its “protest problem”. A high-level event at the
IMF’s Annual Meetings in Washington in October titled “Strengthening
governance through the IMF: Lessons from Kenya and beyond” reflected
both the Fund’s recognition of the need to improve its engagement
with various stakeholders, and a key challenge: the institution’s
propensity to deflect responsibility for the consequences of its own
programmes. Andrés Arauz, of US-based Centre for Economic Policy
Research stressed that, “The Fund should recognise parliamentary
opposition as a valid stakeholder with whom to engage as CSO concerns
are more likely to enter the policy dialogue via the opposition,”
adding that, “it should also open dialogue with CSOs on universally
applicable human rights law, on the binding nature of Sustainable
Development Goals and on the legal status of IMF agreements as
international treaties subject to the convention on treaties between
states and international organizations.”

=====================================================================

ACCOUNTABILITY/News

CAO closure of Tata Mundra case sends chilling message to
project-affected communities in search of justice

US-based civil society organisation EarthRights reported on 10
October that the independent accountability mechanism for the
International Financial Corporation (IFC; the World Bank’s private
sector lending arm), the Compliance Advisor Ombudsman (CAO), has
closed its investigation into the Tata Mundra coal-fired power plant
project in India, which was opened in 2011 (see Observer Summer 2014,
Winter 2013). The CAO closed the case despite concluding that the
“process has been unsatisfactory for complainants, whose concerns
about health, livelihoods, and the environment remain unresolved.”
The communities’ quest for justice resulted in a land-mark lawsuit in
2015, followed by the US Supreme Court’s historic decision in 2019
that the IFC did not benefit from absolute immunity from the law, as
it had claimed (see Observer Summer 2022, Spring 2019). The
perseverance and struggles of the affected fisherfolk communities
were captured in a 2024 documentary, The Fisherman and the Banker,
but despite longstanding efforts, communities remain without remedy
or compensation. Joe Athialy of India-based Centre for Financial
Accountability lamented, “By closing this case without ensuring
remedy for the people, the CAO is rewarding the IFC for violating
their own policies and for not taking any remedial action. This
cannot be allowed to be a precedent for IFC or any international
financial institution to walk away from taking responsibility for the
serious impacts their investments have caused.” The plight of Tata
Mundra communities is not unique, as seen in cases in the Philippines
and Indonesia, among others. Aaron Pedrosa of the Philippine Movement
for Climate Justice stressed, “It is a sad day for all
project-affected communities including those in the Philippines who
look to the CAO to deliver meaningful remedies for harms. This will
be an indelible stain on CAO’s record – a gross failure of IFC’s
accountability mechanism. It sends a chilling message to those of us
still pushing for justice and accountability for harmful IFC
investments.”

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