IMF and WBG 2022 Spring Meetings: Critics sound alarm bells, citing failing global development financial architecture to address debt crisis
The 2022 Spring Meetings of the International Monetary Fund (IMF) and World Bank Group (WBG) took place virtually from April 18 - 24, 2022. Leaders at the events focused on the worsening debt crisis due primarily to unequal recovery from the COVID-19 pandemic and economic turmoil due to the Russian war in Ukraine.
The complexity of global and regional crises have increased, putting additional strain on global development financial architecture. The COVID-19 pandemic, inflation spikes, and political and social instability will drive an additional 75-95 million people into extreme poverty in 2022, according to the World Bank.
The IMF and World Bank highlighted these crises during the 2022 Spring Meetings; however, few solutions were proposed by either institution or the G20. Critics reported that lack of a clear plan in addition to the repetition of failed responses by the IMF, World Bank, and other actors, will increase the risk of a debt crisis comparable to the one that ravaged low- and middle-income countries in the 1980s.
The World Bank announced a crisis package that combines the Green, Resilient and Inclusive Development (GRID) approach with lending, which has been criticized for its reliance on market-based solutions. The package is slated for implementation in late 2022.
The IMF officially announced the creation of the Resilience and Sustainability Trust (RST), which will channel US$45 billion in Special Drawing Rights (SDRs) and has been supported by 12 countries thus far. However, many view the creation of the RST as an imperfect attempt to redress unfair disbursements of SDRs. RST loans come with conditionalities attached and access to the RST is dependent upon having another IMF program. Low-income countries face severe roadblocks in accessing SDRs, largely due to the allocation of different country constituencies.
Similarly, experts criticized the G20 and G7, highlighting the fragile nature of multilateralism and institutional ability to respond to political crises and mounting debt pressure on low-income countries.
The UN’s Economic and Social Council (ECOSOC) will convene the Financing for Development Forum from April 25 - 28, 2022, and will be a key convention to discuss changing global financial ecosystems. The main topic of discussion will include developing a new debt resolution mechanism through the UN.