Observers Assert that Meetings were Lost Opportunity
World leaders gathered for the annual IMF and World Bank Meetings, focused on the pandemic, Ukraine war and decades-high inflation impacting the global economy. The IMF downgraded growth and forecasted losses of $4 trillion between now and 2026. Neither the G20, nor the policymaking bodies of the IMF and World Bank, reached a consensus on statements.
"Russia's invasion of Ukraine dominated the meetings and prevented world leaders from reaching agreements to address the growing global economic crisis," noted Eric LeCompte, Executive Director of the religious development group Jubilee USA Network.
Multiple reports during the meetings focused on a likely global recession, economic downturns, inflation and climate challenges.
"It’s hard to believe that three years into the pandemic, the economic warnings from the IMF forecast greater problems to come,” said LeCompte. “It seems we will see a global recession.”
Developing countries struggle with high debts and interest rate hikes that drive up their debt payments.
"As interest rates rise to tackle inflation, we could see a number of defaults in developing countries,” added LeCompte. "The financial system does not have the tools to deal with multiple debt crises.”
Three countries applied for debt relief under a process agreed by the G20 last year and still have not received debt reductions. The Chair of the International Monetary and Financial Committee welcomed progress on the Zambia debt restructuring under the G20 Common Framework process.
"Beyond some progress on Zambia’s debt restructuring, which comes with significant delay, none of the signals the G20 provided today would encourage borrowers facing debt crisis to use the Common Framework,” stated LeCompte. "Lacking a predictable path for debt relief, indebted countries choose to postpone facing their debt problems."
IMF membership finalized details that allow a new vehicle, the Resilience and Sustainability Trust to begin loans. Three countries, Barbados, Costa Rica and Rwanda, already reached initial agreements to receive loans under the Trust, which takes Special Drawing Rights aid from wealthy countries to fund cheap climate and pandemic loans for vulnerable countries. The IMF also announced pledges of $40 billion in SDR contributions towards the Trust.
"With the Trust already in place, the G20 should focus on similar Special Drawing Rights funding to expand development bank lending," shared LeCompte.
In a statement to the meetings, Africa's Catholic Bishops and major faith leaders called for wealthy countries to rechannel a significant portion of their stock of more than $400 billion in Special Drawing Rights to African countries.
“We especially want to highlight, in our region, the enormous potential of rechanneling through the African Development Bank,” the faith leaders shared.
The IMF also passed a Food Shock Window – a temporary expansion in low-conditions, low-cost loans for countries dealing with food crises.
Members, on the other hand, did not make decisions on the IMF penalty rates for countries taking loans. The surcharges will cost 14 developing countries $8 billion in payments during 2021-2028.
"IMF penalty rates for countries taking loans should be suspended when so many countries need these loans for shocks that fall outside of their control,” stated LeCompte.
Finance ministers discussed proposals to increase development bank lending. US Treasury Secretary Janet Yellen called for development banks to devise new approaches to address global challenges without sacrificing their primary poverty-reduction goals.
"Responding to climate change and other global challenges means that development banks will need to do more,” said LeCompte. "At these meetings, we saw growing momentum to boost development banks so they can provide more aid and lending."
According to the IMF, developing countries will need $300 billion annually in additional funding to adapt to climate change. The World Bank estimates current climate finance amounts should quadruple.
"There is growing concern about the way the climate emergency disproportionately hurts the poor,” added LeCompte.
Jubilee USA, IMF and World Bank Vigil and Paper Chain Delivery: Saturday, October 15th, 11:30 AM, Community Park, outside of the IMF. The chains that we will display in front of the IMF and World Bank between 11:30 AM and noon, were made by churches and synagogues across the US to send messages of debt relief to world leaders. View the advisory here. Link to the online and in-person press registration here.
Read the full African Catholic Bishops and religious leader statement here.
Read Jubilee USA's statement on the IMF and World Bank Annual Meetings here.
Read Jubilee USA's statement on the G20 Finance Ministers Meeting here.
Read Jubilee USA's statement on the IMF World Economic Outlook report here.
Read Jubilee USA's statement on the Global Financial Stability Report here.
Read Jubilee USA's press release on IMF chief Kristalina Georgieva's curtain-raiser speech here.
Read Jubilee USA's press release on the IMF Food Shock Window here.