MARRAKESH: The heads of the IMF and World Bank urged member nations on Friday (Oct 13) to boost the funding firepower of the global lenders to help poorer countries combat poverty and climate change.
They made their plea at week-long talks of global finance ministers and central bank governors in Marrakesh, Morocco – the first IMF-World Bank annual meetings on African soil since 1973.
“We face declining progress in our fight against poverty,” World Bank President Ajay Banga said in his first major speech since taking office in June.
“We face an existential climate crisis, food insecurity, fragility, a fledgling pandemic recovery and we are all feeling the effects of conflict, well beyond the frontlines,” he said.
The world, Banga added, is facing “a perfect storm of intertwined challenges and geopolitical complexity that taken together exacerbate inequality”.
The Indian-born, naturalised US citizen warned of “growing mistrust” between developed and developing nations.
“The Global South’s frustration is understandable. In many ways they are paying the price for the prosperity of others,” he said at a plenary session.
Banga has pushed for change at the bank since President Joe Biden nominated him to succeed David Malpass, who stepped down early from his five-year term following questions about his stance on climate change.
“Today there is a new vision and mission for the World Bank, and that is to create a world free of poverty on a liveable planet,” Banga said. “But time is of the essence.”
Through balance sheet changes and contributions from members, the World Bank chief says it could add more than US$150 billion to its lending capacity over the next decade.
But Banga said more is needed as he called on members to boost the bank’s International Development Association – a lending arm that provides zero- and low-interest loans to the poorest nations.
“We are pushing the limits of this very important concessional resource and no amount of creative financial engineering will compensate for the fact that we just need more funding,” he said.
“This must drive each of us to make the next replenishment of IDA the largest of all time,” the former CEO of Mastercard said.
A US$93 billion financing package was approved in 2021 for fiscal years 2022 to 2025. Donors meet every three years to replenish IDA resources.
IMF Managing Director Kristalina Georgieva noted that the global economy is slowing while “more than half of low-income countries remain in or at high risk of debt distress”.
Georgieva said the IMF needs to be “urgently” strengthened by raising its quotas resources – the money that members put into the fund depending on the size of their economy.
The IMF’s capacity to provide zero-interest loans to its poorest members also needs a boost, she said.