IMF, World Bank to tackle climate, reforms at annual meetings

WASHINGTON

The World Bank and International Monetary Fund (IMF) will tackle the thorny issue of institutional reform at their upcoming annual meetings in Morocco next week.

The two international financial institutions are looking to scale up and retool to pursue ambitious global climate goals, while continuing to support emerging market and developing economies struggling to service rising debt levels.

This year's annual meetings will take place in the city of Marrakesh.

It will focus on building economic resilience, securing structural reforms and reinvigorating global cooperation.

The IMF is locked in negotiations to raise funding levels through an increase in the quotas paid by member countries.

The United States, which has a blocking minority at the Fund, has indicated it would back an across-the-board increase in quotas - a move which would leave the overall voting power of member countries unchanged.

The Fund is also looking to replenish popular concessionary lending facilities for low- and middle-income countries.

This year's annual meetings will be the first for new World Bank President Ajay Banga, a former Mastercard chief executive who was elected on a pledge to boost private sector financing for the transition to renewable energy.

Since taking office, Banga has indicated he plans to reform the bank's current twin mandate of poverty alleviation and boosting shared prosperity to include climate change.

"I think the twin goals have to change to being elimination of poverty, but on a livable planet, because of the intertwined nature of our crises," he told a conference in New York last month.

He added that proposals to reform the World Bank's balance sheet from countries including the US and Saudi Arabia could add as much as $125 billion in extra lending capacity if they come to pass.

This would mark a significant increase for the development lender, which mobilized just over $100 billion in financing last year.

Even if these changes come about, they will likely be insufficient to meet the scale of funding needed for the climate transition.

The World Bank estimates that developing countries will need $2.4 trillion every year for the next seven years just to address the costs of climate change, conflict and pandemics.

While the World Bank and IMF are looking to retool to tackle the climate transition, many members countries are grappling with high levels of debt due to the Covid-19 pandemic and the war in Ukraine.

The current efforts to lower the debt burden of low-income countries undertaken by the G20, the World Bank and the IMF are insufficient, the UN's trade and development chief Rebeca Grynspan said on Oct. 4.

"That is very slow - there are more countries that need help”.

"So we need to have a better mechanism for a faster resolution of the debt problem," she continued, sha said.