IMF/World Bank Meetings: Development Committee urges collective response to unprecedented global development challenges
At the IMF/World Bank Annual Meetings held in Morocco, Mr. Mohamed Bin Hadi Al Hussaini, Chairman of the Development Committee – the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries, delivered a significant address.
Acknowledging the daunting development challenges faced globally, exacerbated by multiple crises impacting the most vulnerable, Mr. Al Hussaini highlighted the imperative for the development community to respond collectively. These crises have disrupted hard-fought development progress, and their resolution is paramount in meeting the Sustainable Development Goals (SDGs), eliminating poverty, fostering shared prosperity, and tackling global challenges.
International financial institutions (IFIs) were urged to collaborate with the United Nations, policymakers, and public and private partners to realize the SDGs and ensure equitable distribution of the benefits of sustainable economic growth. The urgency of this collective effort was underscored.
Governors at the meetings endorsed the World Bank’s fresh vision, aiming to eradicate poverty on a sustainable planet. The newly adopted mission seeks to end extreme poverty and enhance shared prosperity while fortifying inclusion, resilience, and sustainability. This vision and mission lay the foundation for an innovative playbook, offering solutions that align with national priorities and tackle interconnected global issues to drive impactful development swiftly and comprehensively.
The Development Committee welcomed substantial progress on the World Bank’s Evolution Roadmap, which enhances the Bank’s operational and financial model. It includes an agreement on eight global challenges and an additional $50 billion in lending capacity over the next decade. The reduction of the policy minimum Equity-to-Loan ratio to 19 percent, the removal of the Statutory Lending Limit from the IBRD Articles, and increased limits on bilateral shareholder guarantees were endorsed.
Members recognized that shareholder participation in the Portfolio Guarantee Platform and the hybrid capital instrument will further bolster IBRD financing capacity. The mobilization of additional resources through the pilot issuance of hybrid capital to the market was also welcomed. Proposals to increase private capital mobilization by IFC and MIGA, enhancements of Country Private Sector Diagnostics, and the launch of the Private Sector Investment Lab were met with support. Proposals for increasing domestic resource mobilization, including through new Public Finance Reviews, found favor.
The World Bank’s efforts in crisis preparedness, response, and recovery were commended, including the launch of the Climate Resilient Debt Clause for the most vulnerable borrowers. Additionally, the World Bank’s commitment to strengthened partnerships to address development challenges was endorsed.
The ambitious reforms presented at the meetings, aimed at further enhancing the World Bank’s financing and operational capacity, were viewed as essential. These reforms involve increasing private and public resources while leveraging knowledge more effectively. Members anticipate the finalization of the new World Bank scorecard, focusing on measurable outcomes aligned with the new vision and mission, and the development of the Global Challenge Programs.
Emphasizing the transformative impact of empowering women and girls, members looked forward to an enhanced focus on gender equality and human development in the Bank’s next evolution phase. The strengthening of client engagements through the Country Partnership Framework, the commitment to bolster Domestic Resource Mobilization, and the catalyzation of private sector investment were acknowledged.
Members underlined the importance of the World Bank’s operational efficiency to better serve clients and manage risks proactively through robust environmental, social, and fiduciary standards. The creation of the Knowledge Compact for Action was expected to facilitate the use of knowledge for development outcomes.
Furthermore, members acknowledged the necessity of strengthening the International Development Association (IDA) and called on the international community to support an ambitious IDA21. They looked forward to the IDA20 Mid-Term Review and called on donors to pledge to the IDA Crisis Response Window Plus.
The exploration of options to strengthen IBRD’s financing capacity was encouraged. Members called for a focus on people and culture, aligning incentives with evolution reforms, and assessing the implications of all proposals. An update on the implementation of the Evolution Roadmap is expected by April 2024.
The recent Joint Statement of the World Bank President and the IMF Managing Director on enhancing Bank-Fund collaboration was welcomed, as was the launch of the Partnership Charter for reinforcing partnerships through Trust Funds and Financial Intermediary Funds (FIFs) and with the UN system. The partnership with the Inter-American Development Bank to enhance collaboration and drive stronger results was commended.
Members called for the World Bank and the IMF to collaborate closely on debt sustainability, recognizing their joint efforts to support the implementation of the Common Framework for eligible countries and ad hoc debt restructuring processes for vulnerable middle-income countries.
The importance of strengthening the World Bank’s engagement and collaboration with partners and clients on issues such as climate change adaptation, mitigation, and biodiversity was acknowledged. Members looked forward to the upcoming UN Climate Change Conference in Dubai/COP28 following the recent international summits.