This year’s World Bank and IMF spring meetings are taking place as wealthy countries roll out their Covid-19 vaccine programs (see observer Spring 2021) and economic recovery is taking shape. However, this recovery can turn out to be “K-shaped” and depending on access to medical intervention, affordable funding, weight of the fault Burdens, the availability of fiscal space and the risk of cross-border spill-overs. Avoiding a threatening ‘lost decade“That would destroy any hope of achieving the 2030 Agenda for Sustainable Development or the commitments made under the Paris Climate Agreement, requires courageous action that finally breaks with the failed political recipes that brought us here. The Spring 2021 meeting is the place to observe what political directions the World Bank and IMF, as well as their major shareholders, are likely to take during the recovery of the pandemic and whether they can meet the challenges of this critical moment in history.
New general allocation of Special Drawing Rights
As the first meetings of the IMF and World Bank to be attended by the new US administration, Biden, perhaps the most anticipated discussion of these spring meetings is the possible agreement on a new allocation of Special Drawing Rights (SDRs), the international reserve currency to be used by the IMF (please refer shipping Yearbooks 2020, Spring 2020, background Special Drawing Rights). On March 23, IMF Executive Director Kristalina Georgieva gave one statement Following an informal discussion with the IMF Executive Board which found that the Executive Directors had broad support for IMF staff in formulating a proposal for a new SDR allocation of 650 billion. Three discussions took place during the meetings in relation to SDRs include:
1. The size of a new assignment: While Georgieva’s statement indicated that the board of directors supports an allocation of $ 650 billion, which is the maximum that can be allocated without US Congress approval, many have pointed out that the most vulnerable countries in the world need a much larger allocation. All eyes will be on the IMF’s assessment of world reserve needs and whether any ministerial statements support a larger allocation (see observer Spring 2021).
2. Redistribution proposals: Since around 60-70 percent of a new SDR allocation would go to advanced countries and large emerging markets, onlookers like the Center for Global Development have done proposals how the SDRs of wealthy countries could best be used during this time when the financing needs of developing countries are urgent Even if this decision by donor countries will ultimately be voluntary and most likely unilaterally, watch out for proposals that go beyond lending unused SDRs to the IMF Poverty Reduction and Growth Confidence, viewed as a standard option that would tie SDRs to conditional loan programs.
3. Transparency and accountability: Finally with US Treasury Secretary Janet Yellen appear to make their support for a February allocation conditional on increased transparency and accountability, and the G7 accordingly following suit, concerns are raised that US geopolitical interests may limit the ability of developing countries to use SDRs in many ways. This begs the question of what these measures might look like for an SDR mechanism provided as an unconditional fungible reserve.
As pressure grows on the World Bank to provide more grant-based assistance, it has set the wheels in motion and pushed negotiations forward for the International Development Association (IDA20), its low-income country organization, its 20th replenishment cycle. from 2022 to this year (see observer Spring 2021). The mid-term evaluation for the 19th round of the IDA (IDA19), for which the funds should reach until 2023, is unusual, but fast exhausted during the pandemic takes place against the background of the IDA20 negotiations. Several high-level meetings will begin during the spring sessions to discuss recovery funds and proposals for IDA20.
Developing country money continues to flow to private creditors
While the SDR and IDA20 negotiations can result in the funding needs of developing countries being met, much of the funding provided will continue going straight out the back door to repay large private creditors like Goldman Sachs, HSBC and BlackRock, with private creditors refusing to participate in debt relief initiatives like the G20 Framework for Debt Treatment Beyond the Debt Service Suspension Initiative (DSSI), see observer Winter 2020). As civil society continues to call for a more proactive G20 and IMF approach to private sector participation in the DSSI, including legislative changes in key jurisdictions like the UK and US, keep an eye on talks on strengthening debt relief initiatives at the IMF Surcharges and build a better debt architecture.
Vaccine Equality, Cascade, and Health Privatization
After this news which calls for a waiver of trade and copyright regulations (TRIPS) for Covid-19 vaccines, which would relax intellectual property regulations surrounding vaccine production, was again blocked in March by developed countries, the role of the World Bank in introducing vaccines and The wider healthcare response to Covid-19 takes center stage. After the bank failed to publicly support the demand for the TRIPS exemption, World Bank President David Malpass was asked directly about the restrictions on vaccine supplies at the UK University, the London School for Economics and Political Science ( LSE), can be overcome, event On March 23, concerns were expressed that despite its financial support for vaccine initiatives, it was failing to remove barriers to fair access to vaccines (see observer Spring 2021; background Spring 2021).
At the same time, CSOs remain concerned that the bank is favoring private sector funding in its response to Covid-19 and recovery by stepping up its much-criticized cascading approach (see shipping Yearbooks 2020), including by promoting private sector participation in health services (see background Spring 2021). After over 90 CSOs, including the Sierra Leone-based Health Accountability Consortium and the feminist research organization Development Alternatives With Women for New Era (DAWN) sent to open letter to the World Bank, calling on the institution to adopt a “public health first” approach to health funding and to “stop promoting PPPs as a strategy for health care delivery and funding where there is no independent, detailed and local” validated Evidence showing a lasting positive impact on fiscal space for health, efficiency and equal access, ”March 24th.
Global Coordinated Stimulus or Budget Consolidation?
After civil society organizations like Oxfam International, Eurodad and ActionAid International raised the October alert about the austerity rules advocated by the IMF in its Covid-19 recovery assistance (see observer Fall 2020) all eyes will be on the spring of the IMF Financial monitor which will supposedly focus on inequality issues. Whether the IMF will continue to point out how the pandemic has exacerbated inequalities or instead recognize the role of the Fund’s own policies in exacerbating these inequalities remains to be seen. In March, a broad group of civil society organizations advocating women’s rights, inequality, work and the climate held a new frame for the IMF’s involvement in macrostructural issues. The framework offers the IMF an opportunity to deal with the harmful effects of its policy advice on economic and gender-specific inequality and climate change and to adapt better to international framework conditions. With the recovery taking hold amid an unprecedented strain on the fiscal environment of many countries, it is more urgent than ever that the Fund develop its ability to understand the precise tradeoffs of its policies and to clearly steer clear of its most damaging policy advice.
World Bank lags behind in terms of climate commitments
Despite remarks by World Bank President David Malpass that the bank would raise climate finance at the LSE event on Jan. report issued by CARE Denmark and CARE Netherlands in January (see observer Spring 2021). This shows that new and larger World Bank climate finance commitments need to be supported by disclosing the allocation of climate finance at the project level so that the public can have confidence in the quality of these flows.
The World Bank’s Climate Change Action Plan (CCAP) will be discussed in the Executive Board on April 1st. In the run-up to this meeting, 150 civil society organizations and individuals drafted one open letter in March to World Bank President David Malpass and WBG leadership calling on the bank to make an institutional commitment to end all forms of fossil fuel support and support member countries’ efforts towards just transition. The letter reads: “The reality is that the World Bank is now lagging behind in supporting efforts to rapidly reduce greenhouse gas emissions as other actors have made advances on this agenda in recent years.” She argued that as part of this new strategy, the bank should “increase the financial and other resources it uses for renewable energy, decentralized energy access, creating new household electrical connections and supporting a“ just transition ”for workers, communities, and national utilities . “CSOs are calling for the opportunity to formally comment on the CCAP in a public consultation.
While the bank continues its (doing) business as usual …
The over 300 signatories from an open letter sent on March 11 to the executive directors, chief economists and presidents of the World Bank, calling on the bank to criticize its long-standing criticism Make annual report (see observer Spring 2021) will no doubt be disappointed that the concerns raised and the planned publication of the latest report in the near future will not be addressed. Those involved in the #rightsnotrakings campaign will closely monitor the progress of an external panel’s review of the methodology of the report – as there was no external consultation in the panel’s guidelines and questionnaire for contributions. While the bank has agreed to extend the originally proposed unrealistic deadline for contributing to the review from March 31 to April 16, it has remained silent on requesting a consultation with the external panel to discuss and shape its findings.