World Bank, IMF Pledge to Support Countries in Addressing Climate Change, Debt, Digitalisation

Dike Onwuamaeze

The World Bank and the International Monetary Fund (IMF) have declared that they have a critical role to play in helping their member-countries address challenges occasioned by climate change, growing public debt and digital transition.  
They also noted that growth in the world economy has slowed, with the medium-term outlook at its weakest in over three decades while progress in poverty reduction has come to a halt.  

They blamed these on rapidly changing economic environment that was characterised by succession of shocks that had weakened the global economic outlook and left many countries vulnerable.
The two Bretton Woods institutions made this pledge yesterday in a joint statement issued by the Managing Director of IMF, Kristalina Georgieva, and President of the World Bank, Ajay Banga, in which they acknowledged that the institutions have a pivotal role in supporting countries through these challenging and transformational times with their expansive expertise and global membership.

Commenting on debt vulnerabilities, the World Bank and the IMF said the, “current context of elevated debt vulnerabilities gives renewed urgency to intensified collaboration, building and leveraging on our respective areas of expertise.

“We will enhance our joint work to help prevent further build-up of debt vulnerabilities, assisting countries to strengthen debt management and transparency and public finances, while improving the joint Low Income Country Debt Sustainability Framework to better account for current challenges.

“We will also deepen our support to creditors and debtors engaged in a debt restructuring and will work further with our partners to improve restructuring processes, including under the Common Framework, building on the work we launched at the Global Sovereign Debt Roundtable.”
The statement read: “The world confronts significant economic challenges, the existential threat of climate change as well as a digital transition, all in the context of more frequent shocks, high debt levels, limited policy space in many countries and rising geopolitical tensions.
“Well-designed and appropriately sequenced policies are critical to help accelerate growth, alleviate policy trade-offs, and support the green and digital transitions.

“The Bretton Woods institutions have a critical role to play to help member countries address the challenges and leverage the opportunities, working closely together and with partners.
“The world confronts major transformational challenges and more frequent shocks at a time of rising economic and geopolitical tensions.
“Growth in the world economy has slowed, with the medium-term outlook at its weakest in over three decades. Progress in poverty reduction has come to a halt. Conflict and fragility are on the rise.”

“The world,” according to the statement, “is facing geo-economic fragmentation, extreme natural disasters exacerbated by climate change, and increasing levels of public debt.”

They also admitted that rapid digitalisation and technological transformations are creating new challenges and opportunities, adding that “with well-designed and appropriately sequenced reforms, the digital and green transitions can bring tremendous economic, social and environmental gains, and add to welfare and prosperity.”
The joint statement declared that “the Bretton Woods institutions, with their universal membership and specialist expertise, are well placed to make a critical contribution to help countries tackle these challenges.
“The challenges are too great for individual actors to address. International financial institutions, national governments, philanthropic foundations, as well as the private sector, must work together.

“The fund and the bank, working jointly, can play a key catalytic role in this broader collective effort, as they have done in the past.”
 The Bretton Woods institutions were established in 1944 to help rebuild a world economy that was devastated by global depression and war.
They noted that, “as the world economy has changed over the past 80 years, the Bank and the Fund have continued to adapt and worked closely together to serve their members’ needs.

“We are committed to enhancing our collaboration to deliver tangible benefits for people, businesses, and institutions of our member countries.
“We will do so by drawing on our respective mandates and expertise —the World Bank’s diverse skills and experience, including on sustainable growth and structural transformation and its significant footprint in client countries; the IMF with its capabilities to support macroeconomic and financial stability, and promote economic conditions conducive to growth and sustainability.

“We will coordinate closely our global, regional, and country level engagements to ensure that our resources are deployed efficiently and effectively, driven by a focus on results for our members.”
The joint statement further declared that, “today, we need to enhance further our collaboration, in particular with regards to climate change, renewed high debt vulnerabilities, and digital transition.”

It stated that “climate change is a threat to global peace, security, economic stability, and development. “To address this challenge, our institutions need to help all our member countries integrate their climate and development goals. Given the critical nature of this work stream, we will put Bank-Fund collaboration in this area on a more structured and institutionalised footing.
“The world can, and must, come together to address global challenges. The IMF and World Bank are committed to help advance this common effort.”