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Under a boiling Moroccan sun, the World Bank and IMF convened the Annual Meetings in Marrakech from 9-15 October.
New World Bank President Ajay Banga succinctly outlined the stark global context of the meetings in a speech on 13 October, as outside temperatures reached an unseasonal 38°C, noting, “We face declining progress in our fight against poverty, an existential climate crisis, food insecurity, fragility, a fledgling pandemic recovery, and are feeling the effects of conflicts beyond the front.” He noted, “We cannot endure another period of emission heavy growth. …We must find a way to finance a different world where our climate is protected, pandemics are manageable – if not preventable – food is abundant, and fragility and poverty are defeated.”
Yet, despite Banga’s bold rhetoric, there was little to cheer in the official meetings, as the US, Europe and emerging markets again failed to agree on an agenda that would provide the sorely-needed new and additional public finance required to meet these challenges. There was little progress on debt relief, aside from Zambia belatedly signing an agreement under the G20’s Common Framework for debt restructuring after two years spent in limbo. The dogmatic reliance on fiscal consolidation persists, frustrating attempts to meet the Sustainable Development Goals or address the climate crisis.
At a Civil Society Policy Forum (CSPF) panel on 11 October, long-time debt activist Lidy Nacpil of the Asian People’s Movement on Debt and Development made an anguished plea for immediate debt cancellation to address a silent crisis of development retrogression in many countries. New data from Development Finance International showed that many debt-stricken countries, including in the host continent, are spending more on debt repayments than they are on social investments and climate action combined. In response, Guillaume Chabert, Deputy Director of the IMF’s Strategy, Policy, and Review Department, suggested that further domestic resource mobilisation – involving raising taxes on already suffering populations – was the right path forward.
These discontinuities reflected a key theme of the Annual Meetings: Returning to Africa for the first time since they took place in Nairobi, Kenya, in 1973, the Bretton Woods Institutions (BWIs) appeared either unable or unwilling to confront their damaging legacy on the continent (see Briefing, Assessing the Bretton Woods Institutions’ Legacy). There appears to be no effort to learn lessons from past mistakes in order to address the current crises in a way that will meet the BWIs’ stated aims of protecting the poorest, never mind providing support for the structural economic and ecological transformation that would help African countries escape from cycles of debt crises, commodity dependence, low value-added industrialisation and related social and political instability.
Bretton Woods Institutions’ governance reforms: Incremental changes fail to paper over deficiencies of status quo
The US failed to give ground on IMF quota realignment in order to address longstanding issues related to its de facto veto power at the Fund, along with the over-representation of European shareholders. As the International Monetary and Finance Committee (IMFC) chair statement issued on 14 October noted, IMF shareholders left the Annual Meetings with the details of this issue still unresolved, stressing only that they had agreed to “support a meaningful quota increase that at least supports the Fund’s current resource envelope” (see Dispatch Annuals 2023). At the Vulnerable 20 Group’s ministerial on 15 October, IMF Managing Director Kristalina Georgieva confirmed that the terms of this increase will now be discussed by the IMF’s executive board, with the debate being on the size of an equiproportional increase ranging from between 35-50 per cent. This means that, despite commitments to pursue realignment of the IMF quota system to reflect the current global economy in the 16th Review of Quotas – and ensure compliance with the IMF’s own Articles of Agreement – the same formula will remain in place.
The IMFC did at least endorse the creation of a third chair from Sub-Saharan Africa – a change that many viewed as long overdue – and also stated that shareholders “will consider a review of IMF surcharges policy”, after sustained outcry from civil society and others arguing that these are counter-productive and constitute punitive measures against countries most in need of IMF support (see Observer Summer 2021, Winter 2021).
The World Bank’s Governors, meanwhile, “endorsed a new mission and vision to create a world free from poverty on a livable planet,” as noted in the chair’s summary of the Development Committee discussions on 12 October. The endorsement marked the latest milestone in the World Bank’s “Evolution” discussions, following a public consultation on a draft Evolution Roadmap that concluded at the end of July, where civil society – inter alia – expressed concerns about the World Bank’s continued reliance on the Cascade approach (also known as Maximising Finance for Development) after the failure of this agenda, first launched in 2017, to mobilise private finance at scale. As noted in a CSPF panel on 11 October, civil society remains concerned that the Bank’s approach to incentivising private finance fails to acknowledge that the type of projects designed to attract profit-seeking private investors and generate quick and sufficient returns might not match the public interest, or support green economic transformation in Bank client countries – and may in fact have significant negative economic and social consequences (see Observer Summer 2017, Summer 2023). Accountability CSOs have also expressed fears that the Evolution Roadmap’s push to streamline Bank processes may further erode protections for affected communities, at a time when there are concerns that the independent accountability mechanisms of many multilateral development banks (MDBs) are under threat.
Despite the Bank removing all references to the Cascade in a report that was prepared for the Development Committee ahead of the Annual Meetings, the chair’s summary noted that management and shareholders still steadfastly support this agenda, as “Members welcomed additional proposals to increase private capital mobilization, including by IFC and MIGA, the enhancements of Country Private Sector Diagnostics, and the launch of the Private Sector Investment Lab.”
In more candid moments in the corridors of the Annual Meetings campus, however, many privately expressed doubts about the extent to which the changes included in the Bank’s Evolution Roadmap amount to transformational reforms – despite the efforts of some shareholders to put on a brave face publicly. As noted by Charles Kenny of the US-based Center for Global Development in a 12 October blog, a year into Evolution Roadmap discussions, the US has thus far balked at any prospect of a capital increase for the International Bank for Reconstruction and Development (IBRD), the Bank’s middle-income country lending arm – the most straightforward way to expand its financing capacity. Indeed, while the UK and France noted in their Development Committee statements that they would potentially support an IBRD capital increase subject to the Bank delivering agreed reforms, and the Vulnerable 20 Group of Finance Ministers called for World Bank shareholders to develop a proposal for a capital increase ahead of the 2024 Spring Meetings (see Dispatch Annuals 2023), such an outcome is by no means a foregone conclusion.
Kenny noted, “Given G7 leaders have convincingly demonstrated they are not to be trusted when it comes to their repeated invocation of financing volumes in the hundreds of billions, hopefully advocacy groups will at least fight to preserve flatlining aid funding for activities actually in developing economies, with a focus on the poorest,” in a nod to the 21st replenishment process for the International Development Association (IDA21), the Bank’s low-income lending arm, which will begin next year. IDA faces a ‘fiscal cliff’ after significant commitments in the first year of IDA20’s three-year cycle in fiscal year 2023 (FY23, which ended 30 June), meaning that without additional resources from donors before the end of the year, the Bank will have reduced capacity to provide concessional financing and grants for low-income countries in FY24 and FY25.
Civil society out in full force to challenge broken development model
The sterile discussions in the Annual Meetings’ Bab Ighli campus ran parallel to a week of incredibly rich and multi-faceted events, actions, tribunals, and protests from civil society that left no doubt about the extreme urgency to act and sense of desperation from the people in the Global South. A few days before the meetings, the Social Security for All campaign was launched, highlighting the insufficiency of the BWIs’ current promotion of targeted, instead of universal, social protection schemes and stripped-down “social spending floors” to provide adequate buffers to the unfolding multidimensional poverty and inequality crises. A public statement from the Global Week of Action for Debt, Climate and Economic Justice called for debt cancellation, a “new approach to debt sustainability that has the financing needs for the Sustainable Development Goals, climate, and gender equality at its core” and a recognition of the climate debt the Global North owes to the South. The EndAusterity Activism Festival kicked off the week on 7 October, where activists from across Africa strategised ways to break free of the decades-long extractive, commodity-dependent, neoliberal economic paradigm chaining the continent to cycles of gendered austerity and debt. It resulted in a declaration signed by 330 organisations and senior academics calling on the international financial institutions and ministers of finance to throw their weight behind progressive alternatives.
The two-day Reclaim our Future conference on 8-9 October featured advocates, grassroots activists and academics from all continents, as well as spaces for art-making and celebration of resistance, focusing on the responsibility of the Bank and Fund in accelerating the climate and inequality crises and undermining development. Speakers rejected the instrumentalisation of climate action and gender equality for growth as well as the scarcity narrative of the supposed public finance “funding gap“. Instead, they emphasised that the resource extraction from the South to the North through unfair trade deals, global tax evasion, and debt can be countered with a serious commitment to a more redistributive, restorative, rights-based economic model and concrete policy solutions in progressive taxation, debt cancellation, and reparations. They argued this would require fundamental changes to the current global architecture. A Worker’s Townhall with regional and international trade unionists urged for a developmental paradigm shift towards a New Social Contract rooted in the internationally binding definition of decent work and that counters the increasing repression of union organisers in MENA.
The Global People’s Tribunal on the World Bank and IMF on 11 October heard testimonies from affected communities in Ecuador, Egypt, Indonesia, Ivory Coast, Kenya, Malawi, Mexico, Pakistan, South Africa, Uganda, Zambia, and Zimbabwe, calling the BWIs the “worst scam of the century”, for fuelling inequality through a patriarchal, neo-colonial and financialised “development” model in the form of privatisation, public-private partnerships, and channelling vital public resources for health and education towards debt repayments. The four-day Global Counter Summit of Social Movements began with a large protest march and an extensive programme of conferences and panels on the evolving crisis of capitalism and the BWIs’ role in it in the MENA region and globally, impacting food sovereignty, social security, the environment and the fight to end fossil fuel use, as well as political freedoms, while appropriating spaces and language of the feminist and climate movements with false solutions. The Summit loudly rejected “80 years of a financial dictatorship that has maintained and reinforced the oppression of the peoples of the South.” At the World Bank Action Day on 13 October, civil society called on the Bank to end all direct and indirect support to fossil fuels, such as through IFC’s trade finance and financial intermediary lending. Despite protesting in a designated space in front of the building, some activists were later harassed by security forces at the airport.
The BWIs’ answer: “Mitigation” measures for the “most vulnerable”
The official Civil Society Policy Forum could have been an opportunity for Bank and Fund staff to engage with those critiques and alternative proposals in a credible way. Yet, despite their civil society liaisons’ best efforts to secure speakers until the last minute, the absence of BWIs representation on many panels felt symptomatic of the wider lack of self-reflection evident in the Roadmap, the Bank’s draft gender strategy (see Observer Autumn 2023), and the Fund’s approach to austerity, leaving civil society voices, evidence, and proposals quite literally unheard. Thus, Georgieva’s superficial appeal to “join hands” at the civil society townhall on 9 October rang hollow. The Bank, on the other hand, decided against holding part of the formal consultation on its new gender strategy in Morocco despite the large presence of stakeholders from across the globe, a missed opportunity given the consultation deadline on 30 November.
A small highlight was IMF gender and climate staff committing to distributional impact assessments of the Fund’s macroeconomic policies, a long-standing call from civil society, although one that is yet to materialise. Otherwise, when staff did attend – beyond a few notable exceptions – most demonstrated a baffling unwillingness to engage intellectually with arguments outside the BWIs’ narrow economic orthodoxy, instead lecturing panels on technical details of BWIs practices in disregard of the presented expertise and evidence. Despite the Fund’s own Fiscal Monitor press briefing and management’s messages urging “fiscal tightening” lest public climate investments increase debt-to-GDP ratios to 45 per cent by 2050, staff continued to deny the IMF supported austerity. Instead, poverty-targeted “social spending floors” were universally brought up as evidence for the Fund’s tacit recognition that austerity impacts do fray the social fabric and fuel social instability. While analyses from Oxfam and Human Rights Watch demonstrated the severe insufficiency of these supposed floors to mitigate the far-ranging social and economic effects of the Fund’s loan conditionalities, the BWIs’ answer to the climate crisis and poverty at the Annual Meetings was essentially more loans and more conditionality.
These developments left participants with a sense of impending doom – with the Roadmap squeezing climate goals into the Bank’s usual Wall Street Consensus framework, mere “baby steps” on the worst Southern debt crisis ever, dismissal of alternative policy proposals and geopolitical haggling over governance reform, people in the Global South and economic justice allies worldwide are left to wonder just how many countries will have to burn and drown before global leaders grasp the severity of the current crisis. While BWIs leadership continues to evoke the importance of multilateralism, the institutional structures they represent do not seem to have many new answers, and further fragmentation and regional blocs will be a likely outcome, which could both lead to new South-South cooperation or frustrate the scope for joint action on global challenges.
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The Bretton Woods Project envisions a global economic system that operates on the primary principles of justice, equity, human rights and environmental sustainability, with international institutions that are democratic, inclusive, transparent, accountable and responsive to citizens, especially the poorest and most vulnerable. The Project works to amplify the voices of marginalised populations, with a focus on the Global South, by providing avenues for expression, access to decision-makers and opportunities to explore prospects for cooperation with groups globally.
