The IMF-World Bank Meetings have let down the world - Reckless reliance on failed policies will worsen the situation of countries struggling with multiple crises
Eurodad calls for structural and governance reform to both institutions as Meetings show they are not fit for purpose in the 21st century
The European Network on Debt and Development (Eurodad) is calling for reforms to the governance and structures of the World Bank and International Monetary Fund (IMF), as leaders spent this week sticking doggedly to failed policies despite the desperate debt, cost-of-living and climate crises facing the world.
This should start with the overhaul of the unfair quota system, a greater voice and vote for countries that need them the most, and a policy reset.
Jean Saldanha, the Director of Eurodad, said: “As protestors in Washington DC and around the world called for urgent action on the debt and climate crises, inside the institutions their leaders, and G20 Finance Ministers, seemed to have had their fingers in their ears. There are more countries in debt distress, on the brink of bankruptcy, than ever before. More than half of the world’s population in extreme poverty live in these countries. Yet we see the old, failed policies wheeled out time and time again instead of the urgent action that these complex and multiple crises demand.
“The IMF continues to push austerity measures onto countries seeking debt relief*, which is nothing short of unethical for a lender of last resort. At the same time, blind faith in the G20’s Common Framework for Debt Treatments demonstrates the failure to accept that it will never deliver at the speed and rate that countries in debt distress need. We and many others are calling for a reform of the international financial architecture, including the creation of a multilateral debt workout mechanism involving all creditors and debtors under the auspices of the United Nations. Anything short of this will be doomed to fail again.”
The policy framework of both institutions puts the interests of private finance above those of the public sector, and is rife with controversies. A briefing published this week by Eurodad and allies shows that despite their rhetoric, neither institution has done enough to protect and finance universal high quality public services, continuing to promote commercialisation, financialisation and privatisation, including through expensive public-private partnerships. While more development finance is essential to support countries most in need, proposals to increase the firepower of the Bank have to be coupled with new policies to achieve a just transition rather than green-washing.
The IMF's Resilience and Sustainability Trust (RST) is another example of the problematic response of the institutions. The mood was celebratory, marking Barbados, Costa Rica and Rwanda’s success in meeting the RST’s problematic eligibility criteria. Yet the resources that countries can access through the Trust is a fraction of what is needed to fund their sustainable energy pathway. Furthermore, the programme opens the way for a large degree of IMF influence on these countries' climate strategies, including using public resources to leverage profit-oriented private finance instead of green public investment.
Saldanha said: “We expected the Annual Meetings to take these multiple crises very seriously by taking decisive action to channel the billions of dollars worth of Special Drawing Rights sitting idly in the central banks of rich countries to those that need them; urgently cancel or restructure debts instead of continuing to let the Common Framework for Debt Treatments limp on; and to end policy frameworks that constrain developing countries’ ability to chart their own sustainable development paths. What we see instead is that these institutions have let the world down, once again.”
Media contact: Julia Ravenscroft, Communications Manager, Eurodad: [email protected]/ +44 7958 184 695.
Notes to Editors:
*A report published last month - End Austerity: A global report on budget cuts and harmful social reforms - shows that 85 per cent of the world’s population will live in the grip of austerity measures by 2023. This trend is likely to continue until at least 2025, when 75 per cent of the global population (129 countries) could still be living under these conditions.
**This week Eurodad published a report titled Riders on the Storm: How debt and climate change are threatening the future of small island developing states (SIDS). It revealed how SIDS countries have spent 18 times more in debt repayments than they receive in climate finance.
***The new report "Our future is public: Why the IMF and World Bank must support public services" is writtenn and coordinated by Eurodad, and supported by Action Aid, The East African Center for Human Rights, Initiative for Social and Economic Rights, The Global Initiative for Economic, Social and Cultural Rights, Oxfam, Public Services International and Transnational Institute. It argues that international financial institutions such as the World Bank and the IMF are not doing enough to protect public services, despite their rhetoric arguing the opposite, and calls for a new approach.