IMF-WB Annual Meetings: Strong rhetoric, weak action
As the Annual Meetings of the IMF and World Bank draw to a close, Jean Saldanha, Director of the European Network on Debt and Development (Eurodad) reflects on a crucial, but disappointing, week in development finance.
"This was a crucial week for the citizens of developing countries who are being hit hard by the Coronavirus crisis. They are facing increasing poverty, growing inequality and uncertain futures and are looking to the world's leaders for decisive action. Yet despite a week of stirring rhetoric from G20, IMF and World Bank leaders who claim they are determined to tackle the crisis, the results are deeply disappointing.
"Firstly, the G20 failed to strengthen the Debt Service Suspension Initiative (DSSI) and only committed to a six-month extension and a future common framework for debt restructuring, which lacked any detail.The failure to introduce debt cancellation continues to cause dismay, despite calls from more than 500 CSOs in almost 100 countries across the world for this vital measure. Private creditors and multilateral institutions are still not compelled to take part in the initiative, and so it has only covered 1.66 per cent of debt payments due in 2020 across all developing countries. This is a shameful result.
"Secondly, despite IMF rhetoric, it continues to lock developing countries into decades of austerity, putting the achievement of the sustainable development goals and climate agreement in jeopardy.
"Thirdly, the World Bank called for more action on debt, but it still refuses to participate in the DSSI. Despite WB support for emergency health interventions, its plan to respond to the crisis aims to ‘build back better’ by accelerating and scaling-up support for private sector solutions, even though the public sector in developing countries is in desperate need of financial support to provide services and protect the most vulnerable. If the International Development Association (IDA) is further replenished, its resources must be used to shore up the ability of recipient countries to provide qualitative and equitably accessible public services.
"Eurodad is calling for a re-think of the approach of the Bretton Woods institutions during this unprecedented crisis. Without a meaningful change in course, the current approach risks worsening inequalities and amplifying the economic and social fallout of Covid-19. We need ambitious responses, both in scale and in policies, that deliver for the world's poorest instead of empty words and piecemeal initiatives."
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