25 APRIL 2025, BRUSSELS: Under pressure from the US - their biggest shareholder - the World Bank and IMF appear to be turning their backs on previous commitments to climate change and sustainable development. 

Told to “return to its core mission” the World Bank is now promoting ‘jobs creation’. But this turned out to be a repackaging and redoubling of its decade-old ‘from billions to trillions’ agenda, which its Chief Economist said ‘turned out to be a fantasy’. This does not show any meaningful attempt to address job creation or the quality of jobs. It is just a buzzword. 

This situation is especially concerning at a time of global economic uncertainty, threats of a trade war and deep cuts to aid budgets in the US and in many European countries.

Jean Saldanha, Director of the European Network on Debt and Development (Eurodad) said: “The World Bank and IMF have been dominated by a small group of wealthy countries for more than 80 years and this has always raised questions about their legitimacy. This week, we have seen both institutions quickly and quietly acquiesce to US demands to serve its economic agenda first and foremost - demonstrating why this governance structure does not work for the majority of the world.

“It is high time global economic governance moved to the United Nations - and that is why next week’s negotiations ahead of the Fourth International Conference on Financing for Development in June is where all governments should now be focused.”

The aid crisis has been a major issue throughout the Spring Meetings, with many saying the consequences of recent cuts could be worse than predictions made so far. Alongside the USAID closure, other rich countries have also announced significant cuts to their aid budgets - and the most recent data shows the biggest drop in ODA since 2017. This risks increasing countries’ dependence on the World Bank and IMF. Worryingly, this happens at a time when they might be pressured to use more regressive macroeconomic policies and policy conditionalities focused on fiscal consolidation and deregulation to attract private investment. All of this is contrary to a climate and social justice agenda.

On the growing global debt crisis, the Global Sovereign Debt Roundtable offered a “Debt Restructuring playbook.”

Jean Saldanha said: “Global south countries and civil society have asked for a rules-based debt workout mechanism and all that we got this week is a six-page instruction paper with a text so simple that if someone sitting in a Ministry of Finance does not already know what's in the Playbook, they are in the wrong job. This was nothing less than a slap in the face for countries like Malawi who, after the cessation of USAID funding, will need to divert even more funds from health and education to service its debt.

“While recognising increasing public debts, the IMF’s only response to the worsening economic prospects of indebted countries seems to be a copycat of the failed 1980s and 1990s structural adjustment programmes: austerity and deregulation.  

“These institutions are turning back the clock. They cannot be entrusted with the responsibility of the international economic system.

“In the face of US attacks on the climate and sustainable development agenda, some countries, including from Europe, have stood up in defence of multilateralism. We expect this positive stance to translate into European commitments to a transformative and ambitious reform of the global financial architecture at the UN Financing for Development conference.”

ENDS

Media contact: Julia Ravenscroft, Communications Manager, Eurodad: [email protected]/ +44 7958 184 695.