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Bretton Woods Observer Summer 2026
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. IMF and World Bank’s muted response to illegal attacks on Iran
deepens legitimacy concerns
2. World Bank Scorecard midterm review: More data, uncertain outcomes
3. Building what was never built for us: The Borrowers’ Platform and
the fight to correct sovereign risk
By Ambassador Ali Naseer Mohamed, Permanent Representative of the
Maldives to the United Nations
4. World Bank’s Climate Change Action Plan extended despite US
pressure
5. New World Bank mineral and metals strategy challenged to avoid
pitfalls of extractionist approach
6. World Bank’s Water Forward initiative: Ensuring equitable water
security, or narrowing paths to public solutions?
7. World Bank Group accountability mechanisms merger: The decision is
made – now comes the hard part
Guest comment by Dustin Schäfer, Urgewald
8. South Africa’s power utility in early discussions with World Bank
on nuclear financing
9. World Bank Group distracted by internal restructure and reforms
10. Pierre‑Olivier Gourinchas steps down as the IMF’s Chief Economist
11. New Independent Evaluation Office report calls for stronger
integration of climate into IMF surveillance and lending
12. Global Partnerships Conference and World Bank Group’s London
Financial Solutions Hub put spotlight on UK’s private finance push


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IFI Governance/Analysis

IMF and World Bank’s muted response to illegal attacks on Iran
deepens legitimacy concerns

SUMMARY
- No emergency response from IMF and World Bank as countries reel
from global economic shock caused by war
- Roots of current crisis lie in decades of austerity measures and
deindustrialisation of the South
- CSOs call for debt relief and a fundamental reorganisation of the
international financial architecture

The inequality inherent in the international financial architecture
(IFA) has been laid bare by the United States’ (the BWI’s largest
shareholder) war on Iran and from its ally Israel’s campaign of
destruction and ethnic cleansing in Lebanon. The crisis deepens
questions regarding the legitimacy of the Bretton Woods Institutions
(BWIs) – the World Bank and IMF – as central pillars of the
multilateral system. The rising prices of petroleum, gas and other
commodities have already produced food and fuel inflation,
disproportionately impacting the working class, women, the poor and
marginalised communities (see Briefing, Fuelling inequality: The
gendered impacts of World Bank and IMF fuel subsidy removal).
Indonesia has moved to shutter social welfare and protection
programmes, while Egypt, Bangladesh, Pakistan, Sri Lanka and Thailand
have rationed energy to preserve their fuel reserves. Protests
against fuel price hikes, driven also by the removal of consumer fuel
subsidies, have taken place in Kenya while In Bolivia, an oil
producing country currently negotiating an IMF programme, weeks of
protests demanded that the incumbent US-backed right-wing
administration, vocally supported by the World Bank, step down. As
Shereen Talaat, of the MENAFem Movement observes, “The current
escalation is not just a geopolitical or security crisis. It is a
crisis of the international financial system itself. For decades,
when wars, climate disasters, pandemics, or financial shocks happen,
ordinary people in the Global South pay the price. The link between
militarism and the international financial system is neither random
nor unimportant. Armed conflict creates huge profits for fossil fuel
companies, arms makers, and financial institutions, while
simultaneously pushing indebted countries deeper into crisis.” Roots
of current crisis lie in debt and austerity The depth of the current
crisis is not solely caused by a supply-shock but by the long history
of de-industrialisation of the South, including via the BWIs’
structural adjustment policies. Countries’ increased vulnerability to
exogenous shocks is the cumulative product of decades of IMF and
World Bank austerity policies that have weakened Global South
economies, dismantled the regulatory state and made them dependent on
the global market for essential commodities. Shehrzadae Moeed of
Pakistan-based civil society organisation (CSO) the Alternative Law
Collective argues that “decades of World Bank involvement in the
energy sector have meant that instead of securing affordable energy,
projects such as the International Finance Corporation’s (IFC)-funded
Port Qasim Liquefied Natural Gas (LNG) terminals forced Pakistan into
long-term contracts with Qatar. This has locked the country into
importing expensive fossil fuels and diminishing its ability to
develop energy security and affordability through renewable energy
systems. Meanwhile, IMF conditionalities required significant levies
and surcharges on petroleum, prioritising revenue generation for debt
servicing over citizen well-being in a country where almost a third
of the population lives below the poverty line.” The significance of
the BWIs is increasing, as countries are forced to turn to them to
deal with the fallout. Twenty-five countries have already sought
emergency loans from the World Bank and 12 countries have reportedly
gone to the IMF for further loans. The crisis is therefore worsening
debt levels, which are already at record highs, and entrenching the
power of the BWIs in the IFA (see Observer Winter 2025). Yet there
has been no ‘emergency response’ from the BWIs, as was the case
during the Covid-19 pandemic and post Russia’s invasion of Ukraine.
CSOs have called for a robust emergency response, with Talaat arguing
that the depth of the current crisis requires fundamental change
including, “a democratic and representative international financial
system, a fair sovereign debt resolution process under the United
Nations, wider use of SDRs without conditions, the removal of IMF
surcharges, and more freedom for countries to pursue
industrialisation, public investment, food sovereignty, energy
sovereignty, and care-centered development.” BWIs’ Global North
shareholders undermine the multilateral system The multilateral
system was designed ostensibly to avoid states’ unilateral actions
undermining monetary and macroeconomic stability. Yet the BWIs’
Global North shareholders have arguably weakened multilateralism, not
least by ensuring that the BWIs are all but excluded from the UN at
80 process (see Observer Spring 2026) even though they are formally
both specialised UN institutions (see Observer Spring 2026, Autumn
2025). In policy terms, both institutions have belatedly recognised
that fuel and food shortages will exacerbate the debt crisis.
However, they are still mandating further austerity, warning
countries not to introduce subsidies to prevent economic collapse and
protect social cohesion, and instead introduce targeted and temporary
measures – which have been extensively criticised. As Osama Diab, a
researcher specialising in development and economic rights notes,
this is a continuation of a historical dynamic where Global South
economies are “compelled to absorb sacrifices; interest rate hikes,
austerity, currency devaluation & privatization, which the IMF
markets as the only available remedy for crises these countries
played no part in creating.” While the IMF sees fit to criticise
countries for deigning to introduce industrial policies that could
help protect economies from the vicissitudes of Global North leaders,
the BWIs have been largely silent on the ‘spillover effects’ of the
geopolitical manoeuvrings of their largest shareholder. The IMF has
criticised China for causing “adverse spillovers to trading
partners”, while the US Article IV contains no mention of the
damaging global consequences of the Trump administration’s economic
policies. As supposed pillars of the IFA, charged with development
and financial stability, the BWIs are apparently unable or unwilling
to critique the US’s direct role in creating the crisis (see Dispatch
Springs 2026). The question of how countries deal with exogenous
shocks, which are increasing in number and duration, is set to become
more urgent as a result of the growing importance of rare earth
minerals (see page 5), coupled with increased use of industrial
policy by the US, Europe and other important shareholders. Talaat
argues that “the failure of the IMF and World Bank to address the
economic effects of actions taken by their most powerful members
raises serious questions about legitimacy, accountability, and
democratic governance in the international financial system. A New
International Economic Order is not just a historical slogan. It is
an urgent need. As crises become more frequent and connected, the
choice is becoming clearer: continue managing instability through
debt and austerity, or create a global economic system based on
justice, solidarity, sovereignty, human rights and anti-imperialism.”

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IFI Governance/News

World Bank Scorecard midterm review: More data, uncertain outcomes

The midterm review of the World Bank’s Corporate Scorecard – a set of
22 outcome- focused indicators to measure the Bank’s progress (see
Observer Autumn 2024, Summer 2023) – is now underway. The review’s
purpose is to assess whether the indicators that track performance
against development outcomes are fit for purpose and to make
necessary adjustments before the cycle concludes. The Independent
Evaluation Group (IEG) is conducting a parallel evaluation to feed
into the process, flagging in its approach paper the risk that
scorecards can become tools “for seeking legitimacy, rather than
mechanisms for improving organisational effectiveness.” Civil society
organisations (CSOs) following the review report that the timeline
remains opaque, with little clarity on when the review will conclude
or how external inputs will be incorporated, calling into question
whether the review will afford meaningful space for course correction
(see Observer Autumn 2024). US-based CSO Bank Information Center has
identified gaps in the Scorecard’s disaggregation methodology, and
amongst others, in the net greenhouse gas indicator, which excludes
development policy financing and IFC trade finance from emission
measurements. The jobs indicator – not part of the original 21
indicators – has also drawn criticism from the International Trade
Union Confederation, with Evelyn Astor, its director of economic and
social policies, noting for Devex in April that the metric fails to
capture job quality: “If the average wages are poverty wages, then
your indicator using average wages as a benchmark is useless.” The
new system discloses more data, but much of it remains difficult to
interpret, raising questions about conflating volume with
transparency. Whether these disclosure gaps translate into
substantive indicator changes during the midterm review will test the
Bank’s commitment to accountability over optics.

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Finance/Guest Analysis

Building what was never built for us: The Borrowers’ Platform and the
fight to correct sovereign risk
By Ambassador Ali Naseer Mohamed, Permanent Representative of the
Maldives to the United Nations

SUMMARY:
- Borrowers’ Platform represents significant step in addressing
long-standing imbalances in the international financial architecture
- Platform will provide affiliated states the opportunity to share
experiences, discuss common challenges and coordinate through a
formal mechanism – as long available for creditors

Every borrowing country knows the moment when a risk model becomes a
verdict. It comes quietly, in a rating note or a debt assessment. A
sea-wall built to protect an airport is counted first as debt, or a
clean energy project meant to cut fuel imports is treated as another
fiscal burden. The Borrowers’ Platform was created to answer that
problem. Launched in Washington DC in mid-April, on the margins of
the IMF and World Bank Spring Meetings, it followed the Fourth
International Conference on Financing for Development (FfD4), in
Seville, Spain, in 2025 (see Observer Summer 2025, Spring 2025).
Rooted in the Compromiso de Sevilla, the FfD4 outcome document, the
Platform gives borrowing countries their own space to build an
evidence base, confidence and collective weight. The Platform matters
because it responds to a demand that long predates Seville. Since
calls for a New International Economic Order in the 1970s, developing
countries have sought greater agency within global economic
governance (see Observer Autumn 2024). The debt crises of the 1980s,
the Heavily Indebted Poor Countries initiative, and recent debates on
sovereign debt architecture exposed the same imbalance: those most
affected by the rules often have the least influence over how they
are made. The institutions governing sovereign finance were built by
a narrow set of actors at a particular historical moment. Many of
today’s borrowers were absent from those rooms because of colonial
rule, unequal representation, and the post-war power configurations
that shaped the original architecture. The methods they adopted still
carry traces of that origin. A secretariat gives that space a working
centre. The United Nations Conference on Trade and Development
(UNCTAD) is well placed for that role, with its long record of
in-depth understanding of developing-country debt and financing
constraints. I served on the Working Group, comprising seven
countries from the UN’s regional groups, that helped finalise the
Platform’s institutional shape. I represented the Maldives, a small
island developing state (SIDS), facing many constraints the
initiative seeks to address. The discussions were technical, but the
stakes were political. The Platform had to be borrower-led, trusted
by members, and useful across different debt profiles and financing
needs. Long before a debt crisis reaches the negotiating table, many
of its terms have already been set. Sovereign finance is shaped by an
asymmetry of power between lenders and borrowers: the information,
expertise, negotiating capacity and agenda-setting ability that
determine how risk is judged (see Observer Winter 2025). It appears
in rating reviews, debt sustainability assessments and market signals
that move faster than government explanations. The Platform will work
to address the tangible costs of the current system None of this
means lenders and investors lack legitimate concerns when assessing
sovereign risk. Indeed, markets perform an essential function in
allocating capital and pricing uncertainty. The question, however, is
whether risk is being fully understood. Existing methods are often
better at measuring debt than recognising the resilience that debt
may finance. They see the liability more clearly than the protection
and stability behind it. For SIDS, the cost is visible in numbers.
ODI Global found in 2025 that ten SIDS issuing US dollar-denominated
bonds between 2003 and 2023 will pay an estimated $78.7 billion in
repayments on $36.6 billion borrowed. Had those countries borrowed at
the average rates available to the Group of Seven (G7) industrialised
economies, almost $34 billion could have been freed for climate
resilience and the achievement of the Sustainable Development Goals.
That is what a risk premium costs. For small economies, $34 billion
is no abstraction. It is the sea-wall delayed, the clinic or island
hospital left unbuilt, and the social protection that does not reach
vulnerable families when prices rise or storms hit. In the Maldives,
we know this problem well. When we go to market, we pay a premium
that our fundamentals do not justify. Much of what we borrow for is
meant to reduce future risk. The debt appears immediately in the
assessment, but the resilience it buys is harder to quantify. Then
the cycle tightens. Vulnerability is priced in. Capital becomes more
expensive. Fiscal space narrows. Investment is delayed or scaled
back. The next assessment sees the result and treats it as proof. The
Platform’s role is practical and non-confrontational. It gives
borrowers a setting for peer learning, technical exchange, and
structured dialogue with the institutions and markets that shape the
price and terms of finance. Still, some questions remain. During the
Platform’s design, participants agreed that it should remain
borrower-led, although views differed on what that meant in practice.
Some wanted technical exchange. Others saw room for shared positions
on systemic questions over time. More countries are now joining the
Platform. Membership will endure only if it helps borrowers navigate
the information gaps and technical imbalances that shape how they are
judged. For too long, sovereign finance has spoken about borrowing
countries with partial information. The Borrowers’ Platform gives
them a place to find answers, and for borrowing countries to build
what was never built for them.

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Environment/Analysis

World Bank’s Climate Change Action Plan extended despite US pressure

SUMMARY
- World Bank’s 45 per cent climate finance target ‘retired’ after US
criticism
- CCAP will be evaluated by Bank’s Independent Evaluation Group after
extension
- Civil society criticised World Bank management for lack of clear
signal on future of institution’s climate work

The World Bank Group’s (WBG) Climate Change Action Plan (CCAP) was
extended indefintely on 29 June, after negotiations were successful
in resolving an impasse on the immediate future of the Bank’s climate
work. A World Bank’s statement announcing the extension of the CCAP
said the WBG’s 45 per cent climate finance target would be retired,
although the Bank will continue to report to the executive board on
climate finance totals. The short statement indicated that the Bank’s
Independent Evaluation Group (IEG) would review the CCAP, but did not
provide a time-frame or clarify how the review would inform the
future of the Bank’s climate commitments. WBG management and
executive directors remained locked in discussions about extending
the CCAP for months, with the United States – the Bank’s largest
shareholder – actively seeking to weaken the Bank’s climate
commitments despite a deepening global climate crisis. The World
Bank’s 2021-2025 CCAP (see Observer Summer 2021) was extended for 12
months last year and was due to expire on 30 June. The 2021-2025
CCAP, the Bank’s second five-year plan following the 2016-2020
version, committed the institution (inter alia) to aligning all its
activities with the Paris Climate Agreement – to which the Bank is an
observer – a process it ultimately launched on 1 July 2023. It also
included the creation of a new diagnostic, Country Climate and
Development Reports, through which the Bank helps countries assess
how to integrate climate and development planning, and an initial
target of 35 per cent of its portfolio consisting of climate finance,
which was later increased to 45 per cent. Negotiations among WBG
shareholders on a possible extension of the 2021-2025 CCAP have been
extensive, amid the US’s wider war on climate action and slashing of
development finance. In his statement to the World Bank’s Development
Committee in April, US Treasury Scott Bessent called the CCAP’s 30
June expiration “long overdue” and criticised the WBG target of 45
per cent of its lending and other investments being climate finance
as “distortionary”. However, according to reporting by Devex, the
G11+ group – consisting of the executive directors representing the
Bank’s borrower countries – issued a joint letter in May calling for
a one-year extension of the 2021-2025 CCAP accompanied by a review by
IEG to inform a decision on the best way forward. With fossil-fuel
producing countries such as Russia and Saudi Arabia signing the
statement, the US’s position appeared increasingly isolated.
Previously, ahead of the 2025 Annual Meetings, Reuters reported that
19 World Bank executive directors had issued a joint statement
indicating that they expected the World Bank to develop a new version
of the CCAP. A 27 May letter signed by 93 civil society organisations
(CSOs), including Power Shift Africa and Climate Action Network
International, criticised WBG management’s unclear signals about the
future of the Bank’s climate work, and called for, “No lapse or
retrogression” of its climate commitments, and a “further one-year
extension of the 2021-2025 CCAP, allowing time for the development of
a new five-year CCAP, via consultation with Bank member states and
global civil society.” World Bank climate finance emerges as key
battleground The Bank’s 45 per cent climate finance target, which
drew the ire of Bessent, was announced by World Bank President Ajay
Banga at COP28 in late 2023. This effectively superseded the 35 per
cent target included in the Bank’s 2021-2025 CCAP, which – per the
Bank’s controversial climate finance reporting (see Observer Autumn
2022) – it had already surpassed at the time. According to the Bank,
in fiscal year 2025, the WBG delivered $50.8 billion in climate
finance – a record high – with it counting 48 per cent of all
investments as having ‘climate co-benefits’, the Bank’s benchmark for
being counted as climate finance. However, CSOs have criticised the
lack of transparency of World Bank climate finance – which is
particularly glaring for the International Finance Corporation (IFC),
the Bank’s private investment arm, and the Multilateral Investment
Guarantee Agency (MIGA), the Bank’s commercial insurance arm, which
only publish aggregate totals of their annual climate finance, rather
than project-level information (see Briefing, Grading the World Bank
Group on climate justice principles). The Bank’s climate finance is
also largely provided as loans, with the exception of some financing
provided via the International Development Association (IDA), the
Bank’s low-income lending arm. This raises the issue of the alignment
of this finance with the ‘polluter pays’ principle enshrined in the
UN Framework Convention on Climate Change. Despite these
shortcomings, the finance provided by the Bank and its multilateral
development bank (MDB) peers is currently a key pillar of efforts to
mobilise $300 billion in climate finance for low- and middle-income
countries by 2035, as part of a new global climate finance commitment
agreed at COP29 in late 2024 (see Observer Winter 2024). World Bank
risked breaking promise to renew CCAP agreed in IDA21 replenishment A
significant backdrop to the negotiations was the fact that the World
Bank committed to developing a new CCAP in the report for the 21st
replenishment of IDA (IDA21), approved by World Bank governors in
April 2025. The IDA21 replenishment report explicitly noted, “The WBG
commits to developing a successor to the Climate Change Action Plan
(CCAP) 2021-2025. It will evolve in view of the WBG Scorecard,
corporate targets, and other strategic initiatives.” In response to
the CCAP extension, Haneen Shaheen from regional CSO MENAFem Movement
noted, “Climate action is not an optional add-on to development – it
is the foundation of it. Any attempt to dilute the World Bank’s
climate commitments while communities face escalating debt,
displacement, and climate disasters is a step backwards. The Global
South needs transformative, accountable public finance, not diluted
frameworks and disappearing targets.”

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Environment/Analysis

New World Bank mineral and metals strategy challenged to avoid
pitfalls of extractionist approach

SUMMARY
- New World Bank mining and metals approach aims to quintuple
investments centred on country compacts and private sector
mobilisation
- Civil society and academics question strategy’s ability to adapt
from failures of previous extractionist approach

In 2025, the World Bank began an update of its approach to metals and
minerals. In light of the increased geopolitical importance of mining
– and given the World Bank’s long-standing support for economically,
socially and environmentally damaging mining and resource extraction
from the Global South, as outlined by US-based The Oakland Institute
– civil society and academics have called for a radical departure
from previous approaches (see Observer Winter 2025, Spring 2016,
Spring 2015, Winter 2014). The update process has been beset by
confusion, and it has been unclear until recently that the new
website seems to constitute the new ‘strategy’. Whatever the case, it
is clear that the new strategy will be closely linked to the Bank’s
much criticised ‘jobs agenda’ (see Observer Winter 2024), and
anchored on “locally-led” country compacts. To date the Bank has
launched four compacts with Bolivia, Malawi, Mauritania and Zambia,
with plans for additional compacts to be finalised during the year.
Crucially, the approach further embeds a reliance on private capital
mobilisation and de-risking of private investments (see Observer
Summer 2025, Autumn 2022) with its detrimental impact on state
capacity to direct the just transition (see Observer Winter 2025;
Briefing, A just energy transition deferred). The Bank has shown its
ambitions quite clearly in a blog stating that it plans to,
“quintuple [its] support to metals and minerals in the next five
years.” Providing further emphasis on the importance multilateral
development banks (MDBs) have attributed to the issue generally, a 17
April joint MDB statement – which tellingly excluded Global South-led
institutions such as the New Development and Asian Infrastructure
Investment Banks – concluded with a ‘call to action’ to “rapidly
scale diversified, resilient, and responsible critical minerals to
manufacturing value chains.” Sovereignty in times of crises and
geopolitical pressures The World Bank and broader MDB focus on metals
and minerals must be seen within the increasing geopolitical and
economic importance of mineral and rare earth supply chains, which is
evident in recent agreements reached between the US and the European
Union and the United Kingdom. On 16 April, Mining.com reported that
US Treasury Secretary Scott Bessent pressed the World Bank to, “pivot
towards funding critical minerals projects in an effort to bolster a
supply chain that’s currently dominated by China.” The article also
stressed that, “[multilateral finance] is being repositioned as a
tool to counter China’s dominance in mineral supply chains. The Asian
country controls over 90% of rare earths and some other critical
minerals, giving Beijing leverage over Western countries on trade
matters.” The strategy will confront the fact that geopolitical
priorities of major MDB shareholders such as the US, Europe and
Japan, and the dire economic circumstances faced by many mineral and
metal exporters (see Observer Winter 2025), may curtail exporters’
ability to avoid the pitfalls of mining dependence outlined in the
United Nations Conference on Trade and Development’s (UNCTAD) March
and June reports. “It remains unclear whether the strategy adequately
confronts the fundamental development challenge facing resource-rich
economies,” stressed Karabo Mokgonyana of PowerShift Africa. “History
demonstrates that extraction-led growth, even when accompanied by
significant foreign investment, rarely delivers sustained
industrialisation on its own. The strategy’s success will be
determined by its ability to expand the policy space available to
resource-rich countries to pursue their own industrialisation and
development priorities. Anything less risks repackaging a familiar
extractive model in the language of the energy transition or minerals
development,” she added.

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Social Services/Analysis

World Bank’s Water Forward initiative: Ensuring equitable water
security, or narrowing paths to public solutions?

SUMARY
- Water Forward promises water security for one billion, yet its
infrastructure-first approach risks concentrating resources in
already viable countries while leaving poorest behind
- CSOs argue equitable outcomes require explicit investment in rural
provider capacity and genuinely inclusive decision-making at local
levels

Launched at the World Bank and IMF Spring Meetings on 15 April, Water
Forward is a global platform, developed by the World Bank Group in
partnership with other multilateral development banks (MDBs) –
including the African Development Bank, Asian Development Bank and a
consortium of philanthropies and finance institutions – to improve
access to safe water for one billion people by 2030. The headline
number is striking: four billion people currently experience water
scarcity, and water underpins an estimated 1.7 billion jobs
worldwide. The political moment matters too: the launch builds
momentum ahead of the upcoming 2026 UN Water Conference, where
financing the implementation of Sustainable Development Goal 6 is
expected to be a central issue. At the core of Water Forward are
country-led water compacts, through which governments define reform
priorities, commit to strengthening institutions, and establish
investment pathways for their water sectors. Fourteen countries
announced their compacts at the launch, with 25 additional compacts
now in preparation. What “reform” really means The platform’s
language about economic reform is telling. Water compacts aim to
improve utility creditworthiness, introduce clearer pricing
structures, and create stable policy environments – conditions the
Bank says are necessary for “market development”. Despite its
contested history of supporting privatisation (see Observer Spring
2024), the Bank has positioned Water Forward as enabling private
participation alongside public sector oversight. Public Services
International (PSI) warned on World Water Day on 22nd March that
combining cost recovery, privatisation and public-private
partnerships (PPPs) badly hit service users and taxpayers,
undermining human rights to water and sanitation. When cost recovery
pricing is imposed through PPPs, private operators shift the burden
to consumers through tariff increases. Public utilities – mandated to
operate in the public interest – traditionally use subsidies to keep
costs low and expand coverage, with cost recovery introduced once
universal access improves. By contrast, private companies extract
profits, narrowing coverage to profitable urban areas and restricting
low-income access. Yet the deeper problem with Water Forward,
according to former World Bank water specialist Joel Kolker, is not
the emphasis on private capital mobilisation per se, but the pool of
bankable water providers. Most emerging market providers are
financially unviable; you cannot “build your way out” with
infrastructure alone. In a blog for Global Water Intelligence in
June, Kolger argued that, what is needed is “stable revenue streams,
operational efficiency, and more transparent governance and
regulatory regimes.” An alternative framework exists: Just Water
Partnerships, conceived by the Global Commission on the Economics of
Water and championed by WaterAid and International Water Management
Institute, would ensure that public-private investment portfolios
prioritise equitable and sustainable outcomes alongside financing,
with genuinely inclusive decision-making at their core. With the UN
Water Conference approaching in December, the Bank faces a critical
test: whether its approach to leveraging private investment can
deliver water security for a billion people without pricing out the
world’s poorest.

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Accountability/Guest comment

World Bank Group accountability mechanisms merger: The decision is
made – now comes the hard part
Guest comment by Dustin Schäfer, Urgewald

SUMMARY
- World Bank Group board announced merger of institution’s
independent accountability mechanisms 
- Civil society groups remain
concerned regarding the independence of the new Bank-wide mechanism 
- Policy framework to guide integration yet to be developed

On 9 June, the World Bank Group (WBG) executive board approved the
merger of its independent accountability mechanisms (IAMs), as part
of WBG President Ajay Banga’s efforts to streamline Bank processes
(see page 8). The new mechanism integrates the World Bank’s
Accountability Mechanism (which comprises the Inspection Panel and
the Dispute Resolution Service) and the Compliance Advisor Ombudsman
(CAO), the accountability mechanism for the International Finance
Corporation, the Bank’s private investment arm, and the Multilateral
Investment Guarantee Agency, the Bank’s commercial insurance arm. It
will be led by a Vice President/Director General. The Bank’s press
release called it a step to “strengthen” accountability. I read that
word with a degree of scepticism. Unfortunately, the process did not
reflect the historic consequence. What was decided The Inspection
Panel, established in 1993, was a political concession extracted by
communities devastated by World Bank projects: displaced by dams,
stripped of livelihoods, ignored by institutions that financed harm
in their name (see Observer Autumn 2017). The Narmada Bachao Andolan
Movement in India and related advocacy resulted in a public
accountability mechanism that gave affected people, for the first
time, a formal and independent pathway to hold an international
financial institution to account. That was a promise to the people
most harmed by World Bank investments, it was not a governance
technicality. For over thirty years, that promise was contested from
within the Bank, with management and several member states never
fully accepting it. Its operational independence was perpetually
tested (see Observer Summer 2017), but it survived, giving the World
Bank something no communications strategy can manufacture: a credible
claim to legitimacy before a sceptical public. That claim is now
being restructured, with the policy framework governing what replaces
it not yet written. What was not decided on 9 June is the substance
of the new mechanism. The final report of the task force on
integration was only publicly disclosed after the board approved it.
Civil society organisations (CSOs), which have spent years supporting
complainants, could not verify what changed between drafts or whose
interests prevailed. Non-regression was invoked in the press release,
but it is a floor, not an aspiration, and stating it publicly is not
the same as designing for it. There is a related failure. The three
existing mechanisms whose staff hold the deepest operational
knowledge of what accountability requires in practice were given far
too marginal a role in shaping the process that determined their own
future. Despite assurances of meaningful engagement, their expertise
was treated as one input among many, not as the foundation for the
reform. The first test is underway The recruitment of the new head
has begun. The independence of an accountability mechanism lives or
dies with its leadership. The CAO’s own policy has for years required
CSO representatives on its selection committee, reflecting what it
takes to build trust with the communities these mechanisms serve. The
task force itself recommended civil society participation in the
selection process for the new leadership. More than 50 CSOs have now
formally asked the board to confirm that this standard will be
honoured. How the board responds will tell us more about what this
reform means than any press release. If civil society is included in
a manner that is decorative rather than substantive, this will
confirm concerns about a rushed process. Not just for CSOs and for
the people whose suffering created the institution that is now being
restructured, but for every government that has justified continued
public support for the WBG to a sceptical domestic audience on the
grounds that the institution is accountable. The stakes are not
abstract Multilateralism is under pressure (see Observer Spring 2026,
Spring 2026). Development cooperation is losing political ground, and
states are increasingly under pressure to pursue growth at any cost.
In this environment, strong citizen-driven accountability is not a
luxury: it is what separates a legitimate development institution
from a lender that has undermined the argument for its own existence.
Poverty reduction without accountability to people living in poverty
is a contradiction in terms. A just transition that cannot be
challenged by frontline communities is not just. An accountability
mechanism that is led by someone chosen through an opaque process, or
whose independence is quietly compromised by institutional pressure,
is not an accountability mechanism. It is a liability dressed as
reform. To the WBG executive directors who pushed for this process to
mean something: the policy framework must match the ambition of the
announcement, and the hiring process must include civil society in
substance, not just on paper. To those who used this reform to settle
old scores with IAMs they never fully accepted: the communities who
rely on these mechanisms are not going away. And the reputational
cost of getting this wrong, at this political moment, is one the
World Bank Group cannot afford. The decision is made. Now comes the
hard part.

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Infrastructure/News

South Africa’s power utility in early discussions with World Bank on
nuclear financing

South Africa’s maligned state power utility Eskom (see Observer
Summer 2024) is in “exploratory talks with the World Bank over
funding for a multibillion-dollar nuclear programme that could be
launched within 12 months,” according to a March report from Reuters.
The Southern African Faith Communities’ Environment Institute
(SADCEI) noted in a 21 May briefing that Eskom is currently planning
significant nuclear power expansion, including 10 GW across multiple
sites, despite a lack of published alternatives analysis or evidence
of value for money. The SACFEI brief noted, “Civil society
organisations warn that a new nuclear project could saddle South
Africans with decades of unaffordable electricity costs, public debt,
and unnecessary risk.” The Bank had a long-standing moratorium on
nuclear energy financing, which was lifted in June 2025, partially
due to pressure from US conservatives (see Observer Winter 2024). As
noted in a March article by Ecofin Agency, “In June, the institution
also signed an agreement with the International Atomic Energy Agency
to strengthen technical and financial support for nuclear projects in
developing countries, particularly around small modular reactors.” A
May op-ed by Ute Koczy of Germany-based civil society group Urgewald
in Enlit, marking the 40th anniversary of the Chernobyl disaster in
Ukraine, argued against the Bank funding new nuclear projects. Koczy
noted, “Nuclear energy is not economically viable, neither today nor
at any point in the future. It remains significantly more expensive
than renewable energy, and no nuclear project has delivered on its
original promises on cost or construction time.”

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IFI Governance/News

World Bank Group distracted by internal restructure and reforms

At a time described by the Center for Global Development as “a very
bad moment for the world’s largest source of development finance to
be so distracted and disabled,” the World Bank Group (WBG) is
undergoing an opaque internal restructuring, as part of President
Ajay Banga’s wider reform agenda. Public details remain limited, but
there are concerns that the changes, especially those to staffing and
departmental structures, are guided by shareholder pressure to cut
costs, despite record income for the International Bank for
Reconstruction and Development in fiscal year 2025. Evidence of the
pressure faced by the Bank from the US was evident in US Treasury
Secretary Scott Bessent’s Spring Meetings speech to the Development
Committee. Bessent noted that the US appreciated “plans for
maintaining flat real budget growth on a Bank Group-wide basis over
the next few years by harnessing efficiency gains to offset increased
costs stemming from increases in business volumes.” Critics including
Professor Mariana Mazzucato, of the University College London, have
recently noted that the Bank already struggles to transform
mission-oriented development into practice due to structural and
organisational procedures. The restructure is therefore especially
sensitive at a time when the recent BWI at 80 report identified this
as urgently needed reform. Early signs of negative impacts are
already emerging. The dissolution of the Social Development Global
Practice, replaced by a narrower social protection team, has
displaced staff working on citizen engagement. Additionally, the Bank
has drastically reduced its pool of expertise by halting all hiring
of short-term consultants, and has cut staffing on environmental and
social safeguards, suggesting a streamlining that may weaken
institutional checks and balances.

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IFI Governance/News

Pierre‑Olivier Gourinchas steps down as the IMF’s Chief Economist

On 1 May, the IMF announced that Pierre-Olivier Gourinchas was
leaving his post as the Fund’s Economic Counsellor and Director of
the Research Department to return to academia at the University of
California, Berkeley, effective on 1 July. Gourinchas is a familiar
face for those following the IMF, publicly presenting the results of
one of the Fund’s flagship publications, the World Economic Outlook,
at the Spring and Annual Meetings. Gourinchas has left the Fund at a
key moment, as the institution is currently undergoing reviews of
some of its main activities, including the Review of Program Design
and Conditionality (see Dispatch Springs 2026) and the Comprehensive
Surveillance Review (see Observer Spring 2026). IMF conditionality
has been strongly criticised by civil society, UN bodies and
academics for undermining states’ capacity to fulfil their human
rights obligations, exacerbating inequalities, and disproportionately
harming the poorest and most marginalised, among other detrimental
impacts (see Dispatch Annuals 2025; Observer Summer 2025; Briefing,
Brace for impact: Social and gender inequality in IMF surveillance).
Federico Sibaja, of international civil society organisation
Recourse, noted, “IMF programme design has repeatedly overlooked the
institution’s own research in recent years, despite evidence
demonstrating the adverse effects of austerity, underinvestment in
public services, and inadequate social protection on macroeconomic
stability. It is therefore essential that the next Chief Economist
ensures the IMF engages meaningfully with heterodox economic
perspectives and that its policy work is guided by rigorous evidence
rather than the political interests of its most influential member
countries.”

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Environment/News

New Independent Evaluation Office report calls for stronger
integration of climate into IMF surveillance and lending

SUMMARY
- Recommendations of IEO evaluation of Fund’s climate work expected
to feed into IMF’s ongoing conditionality and surveillance reviews
- IEO findings echo civil society concerns that climate is unevenly
integrated into IMF surveillance and lending

In June, the IMF’s Independent Evaluation Office (IEO) published its
first evaluation of the Fund’s climate work since the launch of the
Fund’s first dedicated Climate Strategy in 2021 (see Observer Autumn
2021). The findings come at a politically sensitive moment, with the
current US administration – the IMF’s largest shareholder –
increasingly hostile to climate action (see Observer Autumn 2025).
The IMF Executive Board nonetheless signalled broad support for the
Fund’s climate work, noting that while “a few Directors” questioned
whether it had crowded out the core mandate, “most Directors stressed
the need for sustained institutional support to preserve the progress
achieved with the new approach.” The IEO’s recommendations are
expected to feed into the Comprehensive Surveillance Review (CSR; see
Observer Summer 2025) and the Review of Conditionality (RoC; see
Observer Autumn 2025), both due this year. In an 8 June press
release, international civil society organisation (CSO) Recourse
welcomed the findings but argued the IEO’s recommendations did not go
far enough. Recourse’s Federico Sibaja said, “The report
recommendations do not seem to live up to the findings of the
contradictions between austerity and climate policy, fossil fuel
expansion under IMF programmes and the lack of alignment with the
Paris Agreement.” He added, “We now have the responsibility to take
these findings into the CSR, RoC and the Management Implementation
Plan that should go to the Board before the end of the year.” Climate
remains “aspirational” in surveillance On surveillance, the IEO found
that Article IV reports do not systematically estimate climate
financing needs or incorporate them into Debt Sustainability Analyses
(DSAs), treating them as “aspirational”, and called for more explicit
assessment of climate macro-criticality. This reflects a
contradiction in IMF policy advice: DSAs embed fiscal consolidation
measures to ensure debt repayment (see Observer Autumn 2022), thereby
constraining fiscal space for climate action and potentially
reinforcing dependence on fossil fuels. The IEO found evidence that
some IMF-supported programmes are reliant on fossil fuel extraction,
including in Argentina. This is a broader weakness of the IMF’s
surveillance work that was also identified in the IEO’s fiscal policy
evaluation in December 2025 (see Observer Spring 2026), which found
that climate, inequality and other issues the Fund deems “macro
critical” are not consistently integrated into fiscal and debt
frameworks (see Briefing, Brace for impact: Social and gender
inequalities in IMF surveillance), with surveillance in emerging
markets remaining anchored in fiscal consolidation (see Observer
Winter 2023). Aligning non-RSF lending with Paris Agreement On
lending, the IEO recommended strengthening the Resilience and
Sustainability Facility (RSF; see Inside the Institutions, What is
the IMF Resilience and Sustainable Trust?) and clarifying how climate
is integrated within lending, noting “limited and uneven integration”
outside the RSF. Civil society groups and some developing countries
have criticised the requirement that RSF financing is conditioned on
having a separate IMF programme, arguing that this can tie climate
action to fiscal consolidation measures. While the IEO found that
this requirement is one of the RSF’s “most contested features,” it
stopped short of recommending any changes. More broadly, CSOs have
been calling for all IMF lending to be aligned with the Paris
Agreement, including in recommendations to the RoC and CSR reviews.
Yet the IEO noted that the Fund is not planning to do so, citing
“operational flexibility” and consistency with its Articles of
Agreement. Sibaja argues that “while the chapeau report claims the
Article of Agreements blocks any chance of full alignment with Paris,
there is no real legal analysis to support this claim.” IMF Managing
Director Kristalina Georgieva responded to the IEO’s findings, saying
she “broadly support[s] the report’s key recommendations”, but
stressed that climate “should be incorporated only when instrumental
to program success.”


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Finance/Analysis

Global Partnerships Conference and World Bank Group’s London
Financial Solutions Hub put spotlight on UK’s private finance push

SUMMARY
- UK’s May Global Partnerships Conference reflects rich nations’
broader shift towards private finance as development solution over
structural reform 
- World Bank Group announces City of London will
become new London Financial Solutions Hub

The UK government’s Foreign, Commonwealth & Development Office (FCDO)
convened the Global Partnerships Conference in London in May.
Co-organised by South Africa, British International Investment and
the Children’s Investment Fund Foundation, it reflected a broader
shift by rich nations away from traditional overseas development
assistance and towards a “donor to investor” model – a reorientation
accelerated by deep cuts to the UK’s aid budget and increased
military spending (see Observer Spring 2026). Once more, a familiarly
uncritical emphasis on private capital mobilisation (PCM) over deeper
structural reform of a global financial architecture in crisis
prevailed across the two-day gathering (see pages 1-2). The
conference’s resulting compact focused on three areas for
cooperation: financing for sustainable development and resilience;
knowledge, data, technology and innovation; and equitable,
diversified partnerships that deliver. The three-page document is
notably brief but calls on multilateral and international
organisations to “commit to deeper reforms and system coherence and
better support joined-up delivery with partners at country level.” On
financing for development, aside from a heavy private-sector call to
action, the compact notes the need to “address debt pressures and
reform the global financial system so it becomes more shock
responsive,” and “back reforms that strengthen tax systems, public
financial management and investment quality.” Yet, the document is
significantly ambiguous on how exactly the conference and compact
actually support reform and financing initiatives – as UK-based civil
society network Bond reflected in its conclusion on the conference,
noting that substance on vital structural change was sparse despite
extensive calls from civil society in the run up to the conference.
London Stock Exchange takes on WBG Financial Solutions Hub The
conference included an announcement that, in partnership with FCDO,
the City of London would become the World Bank Group’s new London
Financial Solutions Hub. Operating from the London Stock Exchange,
the hub will reportedly connect investors with “high-impact
development projects” and perform a de-risking role for commercial
investments in low- and middle-income countries. UK Minister of State
for Development Jenny Chapman has declared this initiative
illustrates “how the UK is shifting from being a donor to an
investor,” which exemplifies the UK’s focus on deepening its
influence over PCM and blended finance initiatives, as an important
WBG shareholder. In light of deeply detrimental ODA cuts announced by
the UK government in 2025, such a focus raises concerns about the
direction of development policy more widely: prioritising private
capital risks overlooking the vital role of public and concessional
finance, which remains critical for low-income and climate-vulnerable
countries. Evidence suggests that private finance struggles to reach
the poorest contexts, further financialising development, rather than
supporting the Conference’s objective of rebalancing power within
multilateral institutions. Alex Farley of Bond commented, “To date,
private finance hasn’t flowed at scale or to the places funding is
most needed- which suggests that evidence isn’t the main driver in
the UK’s shift ‘from donor to investor’. The UK government urgently
needs to articulate a more rounded development plan that puts public
finance first and uses private finance only where it can genuinely
add value.” These tensions are particularly significant considering
the British government will experience yet more leadership shake-up
this summer following the resignation of Prime Minister Keir Starmer,
and ahead of its upcoming presidency of the Group of 20 (G20),
beginning in December (see Observer Spring 2026), for which UK civil
society has been championing demands. Recent presidencies such as
Brazil and South Africa sought to advance more progressive agendas on
reforming the international financial architecture (see Dispatch
Annuals 2025; Observer Autumn 2024), calling for adjustments to World
Bank and IMF governance structures and quotas, as well as support for
the expansion of fiscal space by addressing debt burdens through
multilateral development bank capitalisation.

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