Debt And Climate Back On IMF, WB Spring Meetings Agenda

With both institutions celebrating their 80th anniversary in 2024, this year’s meeting will have a nostalgic feel, even as it looks to the future.

They arose from the Bretton Woods conference held in 1944, when the Allies sought to regulate the then-still-intense post-World War II international financial order.

At that time, large areas of Asia and Europe were in need of reconstruction, and the financial challenges were great.

In many ways, the current issues are similar, especially as the World Bank and IMF (who just reappointed Managing Director Kristalina Georgieva to a second five-year term) seek a way forward on climate change. It is difficult to

“With the climate crisis, debt, food insecurity, pandemic and vulnerability, it is clear that we need to accelerate access to clean air, water and energy,” World Bank President Ajay Banga said in a recent livestream. He said this at a press conference.

He added that the Bank “cannot tackle poverty without a broader perspective” and said it was taking steps to widen its reach to “create a poverty-free world on a livable planet.” .

Financing countries as they transition to a low-carbon energy future and prepare for the impacts of global warming remains a central focus.

Trillions of dollars are needed in this area, but both the IMF and the World Bank have made clear that they will never be able to meet all the funding needed.

But as Rachel Kyte, a professor of climate policy at the University of Oxford, pointed out on Wednesday, it’s not just a matter of resources.

He said there was a need for “more fundamental cooperation” between the IMF, World Bank and regional development banks at the country level.

Doing so will require “rationalization of procedures and processes.”

Then there is the issue of debt, and the money owed by emerging countries is once again at the center of discussion.

Negotiations between creditors and debtor countries have stalled in many cases, further delaying the implementation of IMF aid programs and the release of funds.

“The fundamental problem is that Chinese people don’t necessarily agree on how to proceed, and given the number of parties involved, they don’t have a clear picture of what they’ve lent to whom. “They don’t have it,” said a person close to the person involved. This was told to AFP.

The issue will be a particular focus of Wednesday’s Global Sovereign Debt Roundtable, which brings together financial institutions, representatives of major bilateral and private creditors, and debtor countries.

This urgency is underlined by the impact on debt of interest rate hikes by major central banks such as the US Federal Reserve and the European Central Bank.

Central bankers are trying to combat post-pandemic inflation with interest rate hikes, which has resulted in soaring debt costs for borrowing countries.

The first rate cuts are expected this year, but interest rates are likely to remain higher in the long term than they have been for the past decade, the people said.

This poses further challenges for governments that can spend more than a third of their income just paying interest on their debt.

“News of inflation is not good news for developing countries, and is particularly troubling for many countries facing the rollover of their Eurobonds due in 2024,” said Clemens Landers, a researcher at the Center for Global Development. Stated. Thursday’s press conference.

“Unless global financial conditions ease, these eurobond rollovers will be a major problem.”