Ahmad M. Awad
This year’s Annual Meetings of the IMF and the World Bank concluded a few days ago, which take place in October of each year. They are the stage where country delegations, IMF departments and the World Bank gather to debate current economic issues and negotiate the provision of different kinds of assistance and associated conditionalities.
The recent gathering was an intense flurry of discussions on several topics and challenges, as the meetings once again took place in person, following two and a half years of online conference calls, due to Covid-19 restrictions.
Negotiations took place in the halls of these two of the world’s most influential economic institutions—between their representatives and the delegations of numerous countries. However, at their sidelines, a wealth of in-depth discussions was held between dozens of experts on economics, development, and political economy, as well as representatives of think tanks, civil society organizations and networks from around the world, on the plethora of present economic challenges and the role of IMF and World Bank policies in shaping national economies, and the global economy at large.
The most significant challenge identified concerned the dizzyingly high levels of debt incurred by countries, which has recently risen to a total of 300 trillion dollars—approximately 350 percent of the combined GDPs of the world’s economies. Most experts warned that a global debt crisis may erupt at any time , plunging the world into a complex economic crisis, especially considering recent hikes in loan interest rates. These circumstances have prompted numerous civil society organizations and CSO networks to call on the financial institutions to cancel the debt of poor countries to enable their governments to guarantee minimum levels of social protection and help curb the spiraling levels of poverty and hunger.
Two issues which also featured prominently in this year’s discussions, as they continue to stunt many of the world’s economies, were stagnation and inflation. Indeed, separate reports issued by both the IMF and the World Bank independently, confirmed that strong indicators signal that the world economy is entering a difficult period of stagflation, because of the economic policies adopted by governments of major countries, and as a consequence of the war in Ukraine. The crisis is expected to exacerbate economic and financial hardships in most of the world’s poorest countries, leading to the further spread of poverty, hunger, and unemployment.
The additional fees (surcharges) imposed by the IMF on borrowing countries also came under heavy scrutiny and criticism, not least by Nobel Prize for Economics laureate Joseph Stiglitz. He joined the critical voices of many civil society actors in accusing the IMF of profiteering from countries in dire need of assistance, while at the same time pushing governments to adopt socially and economically disastrous austerity measures—contributing, among other woes, to the normalization of unfair and exploitative employment practices.
The issue of climate justice was also heavily debated. Climate crises represents a threat to all and is one of the engines behind the economic and social crises ailing countries around the world—here, once again, the poorest countries, and their peoples, are hit the hardest, as extreme weather phenomena and catastrophes such as droughts and floods become ever more common, especially in the Global South. When debating this topic, the president of the World Bank faced staunch criticism over the institution’s policies, which have contributed to worsening global warming, contrary to the Bank’s statements on the matter. At the managerial level, calls were also heard for a reform of the IMF at the structural level—in particular, its decision-making mechanism. In its current form, many accuse it as blatantly unfair and symptomatic of the intrinsic biases, which permeate the global economic system. The United States and European countries alone, for example, hold 53% of the voting power within the IMF, while 55 poor and developing countries account for only 5.4% of the total voting power.
These and various other issues were the subject of much discussion at this year’s Annual Meetings of the IMF and the World Bank. They are of great interest and importance to Jordan and the region at large and will be addressed in greater detail in future articles.