Amidst geopolitical tensions and uncertainty,  and the worsening debt crisis in many Global South countries, the World Bank and IMF Annual Meetings outcomes show the institutions are moving in the wrong direction - favouring fiscal consolidation and private sector interests over timely and fair solutions.

The proud promotion of the International Finance Corporation (IFC)’s first securitisation transaction typified this approach. This operation, arranged by Goldman Sachs, opens the door to pension funds, insurance companies, and asset managers to invest in emerging markets. The meetings placed the focus on the advantages for investors, with little clarity on whether and how this will genuinely serve sustainable development. As the World Bank Group places its ‘jobs agenda’ - driven by  private capital mobilisation -  at the centre of its narrative, its impact on decent job creation, a just transition and socio-economic structural transformation in Global South countries must be carefully scrutinised.   

Both the World Bank and IMF also appeared to be bowing to U.S. pressure to narrow their mandates on issues like climate and gender inequality. Recent announcements of  internal reforms have further fuelled concerns about the pressure being put on them. This retreat, combined with the lack of momentum to heed civil society demands for a true reform of the governance of the Bretton Woods Institutions, once again exposed the legitimacy problems of these institutions.

Jean Saldanha, Director of the European Network on Debt and Development (Eurodad), said: “Private finance is not a silver bullet - on the contrary, it is one of the key drivers of the crisis we are in. IMF Managing Director Kristalina Georgieva herself warned that private credit markets are ‘keeping her awake at night’ - a stark admission that unregulated private lending poses major risks to global stability. Yet, even as these risks grow, the IMF and World Bank double down on private investors as the primary channel for financing development and climate action, sending contradictory signals about their priorities and responsibilities. The private finance-led model to finance sustainable development is a risky bet.

“If they are serious about ‘spending smart’ that must mean investing in what truly builds resilience: climate action, gender equality, public education, health, and universal social protection, and not prioritising creditors or subsidising private profits. 

“This - together with the G20’s woefully inadequate Declaration on debt sustainability - confirmed the urgency to move the agenda on debt, development finance and financial stability to the United Nations, a democratic negotiating space where all countries have an equal say.”

ENDS 

Media contact: Julia Ravenscroft, Communications Manager, Eurodad: [email protected]/ +44 7958184695.