On Sunday, the Annual International Monetary Fund and World Bank Meetings conclude. On Saturday, the International Monetary and Financial Committee (IMFC), the IMF policymaking body, met as part of the IMF and World Bank Meetings. The global economy, economic growth, debt, inflation, and expanding IMF resources to respond to multiple crises are in focus on the agenda.

Eric LeCompte, at the meetings in Marrakesh, is the Executive Director of the religious development group Jubilee USA Network and a United Nations finance expert who monitored IMF and World Bank meetings since 2010. LeCompte releases the following statement on the IMFC meeting and the IMF and World Bank Annual Meetings:

"The IMF forecasts the lowest growth in decades.

"In spite of signs of easing inflation, decisionmakers continue to push for raising interest rates in an attempt to stop inflation.

"The flawed policy of raising interest rates means that more developing countries face debt crisis and food and fuel are too expensive for all of us.

"The emerging analysis from the meetings is that in addition to the tragic loss of life that we see in Israel and Gaza, the conflict affects economic stability, global trade and the poor everywhere.

"The Sustainable Development Goals are becoming more difficult to reach given the global impacts of the pandemic, conflicts, inflation and the climate crisis.

"Developing countries spend twice and a half their health budget, and almost four times their education budget on repaying debt.

"More than half of all countries are having trouble paying their debts and meeting the basic needs of their people.

"A report on the work of the Global Sovereign Debt Roundtable shows little progress in fixing the challenges that face debt restructuring and relief.

"Zambia, which applied for a debt restructuring 32 months ago, will leave the Annual Meetings with a formalized debt relief deal with public creditors.

"The meetings agreed on more options for wealthy countries to use their emergency pandemic relief or Special Drawing Rights to help increase the ability of development banks to provide aid and lend.

"It's great news that some countries are increasing contributions for the IMF to increase low-interest lending to poor countries.

"Unfortunately, IMF surcharges on large emergency loans add to debt burdens when countries are already in crisis.

"We expect decisions on increasing IMF resources to fight crises by the end of the year. The voting reforms that are connected with this seem to be stalled."

Read Jubilee USA's press release on the G20 Finance Ministers meeting here.

Read Jubilee USA's statement on the Development Committee Meeting here.

Read Jubilee USA's press release on the Africa Catholic Bishops Annual Meetings statement here. 

Read Jubilee USA's press release on the IMF World Economic Outlook report and the Global Financial Stability report here. 

Read Jubilee USA's statement on the IMF Global Financial Stability report here. 

Read Jubilee USA's statement on the IMF World Economic Outlook report here. 

Read Jubilee USA's press release on Annual Meetings agenda here.

Read Jubilee USA's press release on IMF chief Kristalina Georgieva's curtain raiser speech here.

Jubilee USA Statement on IMF and World Bank Meetings and IMFC Press Briefing

On Monday, G20 Finance Ministers hold their third meeting hosted in Gandhinagar by the Indian government. The gathering comes as IMF global economic growth forecasts remain the lowest in decades. 

“Global economic challenges are pushing countries deeper into debt,” said Eric LeCompte, Executive Director of Jubilee USA Network, who has followed IMF and G20 policies for more than a decade. “The pandemic, the Russia-Ukraine war and high interest rates are raising debt in developing countries and these countries don't have the resources to respond to their food and climate crises.”

In June, after more than two years, governments holding Zambia debt announced agreement to reduce collection by the equivalent of 40%. However, payments will increase if Zambia’s economy does better, and will not decrease if it does worse than expected. Zambia still has to negotiate a restructuring of near $7 billion in debt owed to private creditors.

“More than 60% of Zambia's people live in poverty,” noted LeCompte. "Not enough debt was cut to address the suffering of Zambia's people."

The debt renegotiation took place under a process set by the G20 in late 2020 to cut developing country debts, the Common Framework for Debt Treatments. Zambia and Chad are the only countries to receive some relief so far.

Finance Ministers will review a report on additional needs for multilateral development bank lending. Former US Secretary of Treasury Larry Summers and former chairperson of the Fifteenth Finance Commission of India Nand Kishore Singh chair the group issuing the report. 

“Development banks need more money and need to implement reforms to effectively distribute additional resources to respond to regional crises,” stated LeCompte. 

G20 commitment to transfer $100 billion in emergency pandemic aid – Special Drawing Rights (SDRs) – from wealthy to poor country economies will also be on the agenda. More than $400 billion, out of $650 billion the IMF created in 2021, went to wealthy economies which committed to redirect $100 billion of their share to developing countries.

G20 Finance Ministers Focus on Debt, Development and Dismal Economic Outlook in Gandhinagar

Washington DC – The IMF launches the Food Shock Window to aid countries facing food shortages by expanding access to rapid, low-interest loans. The number of people facing food shortages rose by more than 200 million since the pandemic.

“All over the world people are struggling with food shortages because of the pandemic, the Ukraine war and soaring prices spurred by inflation,” said Eric LeCompte, Executive Director of Jubilee USA. "The IMF's action helps countries wrestling with food crises."

In 45 countries, 50 million people are on the verge of famine, the World Food Programme reported.

“The growing global food crisis can push countries into social unrest and instability,” added LeCompte. “While the Food Shock Window helps, it is only buying time. More loans as many countries struggle to pay debts is not a long-term answer."

Sixty per cent of the poorest countries and 30 per cent of developing middle-income ones are at risk of debt crises. 

Ukraine War Derails Release of IMF and G20 Communiques

Washington DC – World leaders attending the IMF and World Bank Spring Meetings failed to agree on communiques usually issues during these meetings. On Wednesday, G20 finance ministers failed to release a communiqué over Ukraine wording. On Thursday, the International Monetary and Financial Committee failed to release their communiqué and as of the writing of this article, the Development Committee did not release their customary Friday communiqué.

The war in Ukraine loomed large at the meetings, as the Fund forecast it will cut almost an entire percentage point to global economic growth this year. Talks addressed COVID response and recovery, food prices, inflation, debt crises and climate.

“Before the shocks from the Ukraine war, developing countries faced a series of crises,” said Eric LeCompte, Executive Director of the religious development group Jubilee USA Network. “Another casualty of the war is that world leaders can’t fully focus on pandemic response, inflation, climate change and rising poverty rates.”

The shock threatens a fragile pandemic recovery, with more than 100 countries not on track to vaccinate 70% of their people. Rising food and fuel price inflation will add to the 100 million people that fell into poverty since the pandemic.

“Developing countries now have little room to protect their most vulnerable from rising food prices,” added LeCompte. "The pandemic and the Ukraine war are making food, fuel and fertilizer inaccessible to many developing countries."

In the face of war impacts and rising interest rates, a growing number of countries face debt defaults. Three countries applied to the G20 debt reduction process set up in late 2020, and none of them has received relief.

“The discussion on debt remains perhaps the most difficult in the G20,” shared LeCompte. “The IMF and World Bank leadership put forward valuable and practical proposals to move forward debt relief, but no decisions were made on the proposals.”

IMF Managing Director Kristalina Georgieva announced that twelve countries made pledges worth $40 billion in their share of emergency currency funds or Special Drawing Rights – to help developing countries. The Resilience and Sustainability Trust, approved by the IMF last week, will administer the contributions and disbursements to developing countries.

“The IMF trust is an example of how wealthy countries can aid developing countries in pandemic prevention and dealing with the impacts of climate change,” stated LeCompte. "Unfortunately, the meetings failed to make decisions on vaccine distribution and economic aid for struggling developing countries."

Development Group says IMF Meetings Failed on Critical Decisions

Senior Director of Policy and Campaigns

Jubilee USA Network is an alliance of more than 75 US organizations and 750 faith communities working with 50 Jubilee global partners. Jubilee USA builds an economy that serves, protects, and promotes the participation of the most vulnerable. Jubilee USA wins critical global financial reforms and won more than $130 billion in debt relief to benefit the world's poorest people.

Jubilee USA Network is an alliance of more than 75 US organizations and 750 faith communities working with 50 Jubilee global partners. Jubilee USA builds an economy that serves, protects and promotes the participation of the most vulnerable. 

We appreciate the opportunity to submit these comments on the World Bank Group’s Evolution Process and its Roadmap (“Evolution Process” or “the Roadmap”). 

The Evolution Roadmap comes at a moment of growing understanding about the need to make better use of multilateral development banks for financing development and the response to global challenges. 

The pandemic shock reversed poverty reduction and human development progress globally. The Russia Ukraine war, climate change and hunger are among the crises that the world faces and that hit developing countries worst, due to pre-existing vulnerabilities. Developing countries suffer these shocks amidst reduced fiscal space. The slowest 5-year growth in decades, high debts and rising interest rates combine to limit their capacity to respond and, especially, protect their most vulnerable. 

Multilateral development banks (MDBs) like the World Bank have extraordinary potential to use turn capital contributions from shareholders into development finance interventions several-fold their volume. They have an unparalleled capacity to offer low-cost, long-term funds and play a particularly important role in times of crises, when they provide countercyclical and emergency funding.

 In the Roadmap World Bank shareholders endorsed, they signaled their intention to evolve the institution across three dimensions: mission and vision, operations, and financing. 

Jubilee's comments on the Evolution Roadmap

Jubilee_USA_WB_Evolution_FINAL.pdf

Jubilee USA Comments on the World Bank Group's Evolution Process and Roadmap

Jubilee USA Network

Contacts

Aldo Caliari

Jubilee USA Statement on IMF and World Bank Meetings and IMFC Press Briefing

G20 Finance Ministers Focus on Debt, Development and Dismal Economic Outlook in Gandhinagar

IMF Provides Emergency Food Crisis Loans

Development Group says IMF Meetings Failed on Critical Decisions

Jubilee USA Comments on the World Bank Group's Evolution Process and Roadmap