As the World Bank and IMF annual meetings ended in Marrakech, Morocco, on Sunday, October 14, 2023, no fewer than 10 Multilateral Development Banks (MDBs) have committed to greater collaboration to catalyse financing and boost climate action.
The banks are: African Development Bank, Asian Development Bank, Asian Infrastructure Investment Bank, Council of Europe Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank, Islamic Development Bank, New Development Bank, and the World Bank Group.
In a joint statement, the MDBs declared that they would continue their collaboration in the implementation of their joint approach to align financing flows with the goals of the Paris Agreement on Climate Change.
Ajay Banga, the World Bank president, had set the tone for this partnership during his earlier address when he said that the World Bank was “working alongside MDBs to coordinate global action, catalyse change and multiply impact”.
The MDBs stated: “We are working to enhance our approaches to tracking and reporting climate outcomes, while continuing to jointly report our climate finance commitments.
“As we set ourselves for a successful COP28, we will pursue the launch of several activities and initiatives, including a joint MDB facility to support clients’ Long-Term Strategies (LTS).”
Another key highlight from the World Bank and IMF meetings entailed the World Bank governors’ endorsement of the Bank’s new vision where the Bank will strive for “a world free of poverty on a liveable planet” which was a bid by the World Bank to boost its climate finance.
New, ambitious reforms were also endorsed by the 25-member development committee which would lead to more investments in climate action and sustainable development, it was gathered.
Additionally, sub-Saharan Africa has secured a third seat on the IMF’s executive board, making its position stronger. The Vulnerable 20 group of countries (V20) may also be recognised as a new group within the IMF, alongside the G7, G20, and G24, giving climate vulnerable countries more say in the IMF processes.
Also, The IMF released its World Economic Outlook report which shows that the global economy would slow from 3.5% in 2022 to 3% in 2023, and 2.9% in 2024. This is well below the historical (2000-19) average of 3.8 percent and developing and emerging countries have been hardest hit.
The report showed that commodity prices, including for critical minerals, could become more volatile amid climate and geopolitical shocks which could pose macroeconomic risks, including to the climate transition.
Avinash Persaud, Special Climate Envoy and Negotiator, Barbados, said: “Ajay Banga is a breath of fresh air, but two concerns linger. First, while the ambition for the Bank’s size has been raised since last year, it still needs to catch up to what is required to finance climate mitigation, adaptation and reconstruction after climatic events. Second, he is leading, but will the organisation follow? The staff’s current version of ‘pause clauses’ is a poor imitation of the Barbados ones President Banga supported in June.”
Neema Lugangira, Member of Parliament, Tanzania, said: “The World Bank should ensure that in its new direction, it focuses on: access to water for schools and health centres; food security should go hand in hand with nutrition security; increased public digital infrastucture; and targeted funding for school connectivity. The World Bank and IMF to consider debt swap for climate financing and concluded with need for both development financing agencies to support capacity building for parliamentarians in related areas as a vehicle towards robust accountability and oversight.”
Jason Rosario Braganza, Executive Director, AFRODAD (African Forum and Network on Debt and Development), said: “The Annual Meetings of the IMF and World Bank taking place in Africa after close to half a century is significant. Perhaps not for the announcements coming from the meetings, but for the time it has taken for such important meetings to take place on African soil. African leaders and citizens need to demand more respect on the international stage when it comes to hosting these kinds of meetings. It should not take another half century to come back.
“The meetings of course take place with a heavy debt storm on the horizon. Two countries, Ghana and Zambia have defaulted; others like Chad and Ethiopia also find themselves in severe debt distress and needing the Common Framework process. There are 22 African countries that in debt distress or high risk of debt distress; there are 32 African countries that are paying more in interest debt repayments than they are on education and health. African citizens are facing an erosion in living standards because of the debt fuelled high cost of living that is exacerbated by on going global conflicts.
“The African debt situation is being made worse by the inability of creditors to agree a comprehensive debt deal; the IMF and World Bank advising for more borrowing; and the general inertia in the global system to want to find a lasting solution. As AFRODAD, we are calling for extended debt service suspension, and debt cancellation for African countries.”
Fadhel Kaboub, President, Global Institute of Prosperity, said: “The World Bank and IMF were created in 1944 when most of Africa was still colonised. There was no fundamental change made to these institutions when they met in Nairobi 50 years ago, and no such changes were announced in Marrakesh that would lead me to believe that the global financial architecture would be decolonised any time soon.
“This neocolonial global financial architecture has delivered exactly what it was designed to do, which is 1) to extract cheap raw materials for the Global North 2) to create large consumer markets for the industrial output of the Global North, and 3) to outsource obsolete technologies and low value-added manufacturing to the Global South. This neocolonial global financial architecture has failed us economically and ecologically, so we cannot expect it to be the same architecture that will solve our problems today.
“The WB and IMF did not indicate any interest in decolonising African economies or addressing the roots of our external debt problems. We didn’t hear any announcements about prioritising strategic investments in food sovereignty and agroecology, or investments in renewable energy infrastructure and clean cooking technology for deployment in Africa, or investments in pan-African high value-added industrialisation. World Bank and IMF leaders did not even send any staff members to represent them on civil society-sponsored panels that they were invited to, which shows a complete disregard and lack of respect to any constructive criticism and alternative policy proposals.
“This should galvanise efforts across the Global South to build alternative financial institutions that would challenge the hegemony of the global trade, investment, and financial architectures, and would render the World Bank and IMF redundant institutions that must either be radically transformed or dismantled.”
Iskander Erzini Vernoit, Executive Director, IMAL Initiative for Climate and Development, said: “In the big picture, ensuring additionality and the concessionality of development finance are key barometers for judging the efficacy of international development cooperation today. The World Bank Meetings in Marrakesh delivered only modest results in this respect, when compared to the overall scale of needs of developing country governments and the climate crisis. In the widest sense, the onus remains on high-income countries to bring more counter-cyclical public funds to tackle today’s new crises, in fulfilment of spending goals they adopted over 50 years ago.”
Joab Okanda, Pan Africa Senior Advocacy advisor at Christian Aid, said: During these meetings, we’ve seen the G20 break away from its promise made just last month and for the past five years to deliver a new IMF quota formula that would increase the representation of the global South in IMF decision-making. The latest version of the World Bank Evolution Roadmap represents a deepening, rather than a reversal of the World Bank’s private finance-led approach that has helped create the multiple crises marginalised communities now face across the global South.”
Amy Dodd, Director of Policy at The ONE Campaign, said: “We’ve seen a welcome shift in ambition over the past week but not enough concrete action where it’s needed most. The clock starts ticking now – with accelerating global crises and a limited political window, governments must use the next six months to turn the momentum from these meetings into the game-changing solutions needed to tackle the generational challenges staring the whole world in the face.”
Friederike Roder, VP Global Advocacy, Global Citizen, said: “There were many promising developments in Marrakesh: The World Bank has extended its lending, will start implementing debt pause clauses, and test a hybrid capital mechanism for the first time. Despite this, we need to be more ambitious. According to several reports, more financing could be mobilised from the World Bank and other MDBs without delay.
“The G20 did endorse the call for bigger, better and more effective development banks. However, doing more with the same won’t be enough. The main shareholders, all part of the G20, now need to put their money where their mouth is and show they mean business by COP28. It’s too late to wait until the spring meetings in six months.
“In addition to supporting the hybrid capital mechanism and providing guarantees, shareholders should also ensure the Special Drawing Rights can be fully utilised for green transitions and pandemic preparedness, as well as providing resources for the poorest and most indebted countries. The time for discussions is over.”
Sophie Richmond, Big Shift Global Coordinator, said: “Throughout the Annuals we have heard a lot about Ajay Banga’s vision of reducing poverty on a liveable planet. However, this vision cannot become reality without tackling the cause of climate change – fossil fuels. And gas is a fossil fuel. The future is clean, affordable, sustainable renewable energy. The Bank needs to move away from the dirty energies of the past and support the shift to a healthier, sustainable, liveable planet.”