Debt and climate financing…crucial files at International Monetary Fund meetings

The spring meetings of the International Monetary Fund and World Bank are scheduled to begin on Tuesday, with two clear goals: improving climate financing and helping the most indebted countries.

The International Monetary Fund’s publication of its updated forecasts for the global economy, on Tuesday, will mark the beginning of an event that will not be overshadowed by the issue of the succession of the Fund’s Director General, Kristalina Georgieva, who extended her term, on Friday, for five years at the head of the financial institution.

These meetings will have a special atmosphere. Because it also coincides with the eightieth anniversary of the founding of the institutions emerging from the Bretton Woods Conference, which was held in July 1944, before the end of World War II.

If the financial challenges were huge at that time with the reconstruction of Europe and part of Asia, the challenges that the IMF and the World Bank have to face now are no less important, especially when it comes to helping to finance the fight against global warming, a topic that will once again be in question. The core of meeting discussions.

The President of the World Bank, Ajay Banga, announced during an online press conference at the end of the week, “There is a clear need for rapid improvement in access to clean air, water, and energy, but we will not be able to reduce poverty in the absence of a comprehensive vision, and the first stage is to open the Bank’s scope to respond.” This need, thus creating a world free of poverty on a livable planet.”

Providing financing remains a central point to assist in the energy transition and prepare for the effects of global warming in developing or least developed countries.

In fact, it would require billions of dollars. For the IMF and the World Bank, things are clear: the two institutions will not be able to cover all the resources.

In an open letter, about a hundred figures, including Stephen Fry, Annie Lennox and former British politician David Miliband, asked the G20 on Monday to carry out in-depth reform of institutions to allow them to triple their investments.

But it is not just a matter of means, said Rachel Kite, a professor specializing in climate policy at the University of Oxford, who believes that “it is necessary to have strong cooperation” between the IMF, the World Bank, and regional development banks at the country level. “This involves (in particular) rationalizing procedures and processes.”

Debt is the other big challenge

In addition to climate, the issue of debt of emerging or developing countries will once again be at the center of discussions at a time when negotiations between creditors and debtor countries are faltering in a number of cases, further delaying the implementation of IMF assistance plans and the provision of funds.

A source close to the file told Agence France-Presse, “The main problem is that the Chinese do not necessarily agree among themselves on the procedure that must be followed.” They do not have an accurate vision of what they lent and to whom, due to the multiplicity of actors.”

The topic, in particular, will be on the agenda of the roundtable meeting dedicated to global sovereign debt, which will be held on Wednesday and includes, as in previous editions, financial institutions and representatives of major bilateral and private creditors and debtor countries.

This is a topic that has become more important for a number of countries, noting that the increase in interest rates by central banks in major economies, especially the US Federal Reserve and the European Central Bank, to address high inflation in the past two years, has contributed to a significant increase in the cost of debt for borrowing countries.

Even if the first cut in interest rates takes place this year, in the long term, they will be at a higher level than they were over the past decade, an opinion unanimously agreed upon by many, which constitutes an additional challenge for countries that sometimes spend more than a third of their revenues to pay interest on their debts alone.

For some NGOs such as Debt for Climate, the solution lies in canceling the debt of countries of the South to avoid “debt repayment leaving countries exhausted and unable to confront the effects of a devastating climate crisis for which they are not responsible.”

Clemence Landers, a researcher at the Global Development Center, said during a telephone press conference on Thursday, “This represents a problem for several countries that will face the renewal of their euro debts due in 2024. If financing conditions are not eased at the global level, it may turn “That leads to a real problem.”