October 21, 2024 • 11:01 am ET
Get an inside look at the IMF-World Bank meetings as finance leaders navigate a geopolitically fragmented world
According to International Monetary Fund (IMF) Managing Director Kristalina Georgieva, countries need to relearn how to work together to achieve mutual prosperity.
But with finance ministers and central bank governors descending upon Washington this week for the IMF-World Bank Annual Meetings, there may only be time for a crash course in cooperation, as they will need to tackle challenges ranging from inflation to debt crises and beyond.
To gauge whether delegates can revive the spirit of cooperation in this geopolitically fragmented moment, we’ve sent our experts to the center of the action in Foggy Bottom. Below are their insights, in addition to takeaways from our conversations with financial leaders outlining the global economy’s outlook for the coming years.
The latest from Washington
The IMF needs to find its geopolitical bearing
The IMF-World Bank Annual Meetings in 2024: Five important issues to be addressed
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OCTOBER 4, 2024 | 8:59 AM ET
The IMF needs to find its geopolitical bearing
The following is an abridged version of a recent article in Econographics. Read the full version here.
At the IMF-World Bank Annual Meetings, Western delegates should think hard about how the financial and intellectual capital invested in the Bretton Woods institutions can be put to better use in the interests of democracies around the world.
The World Bank’s case is relatively straightforward (it needs more financing and efficient project implementation), while the IMF’s case is more complicated. The fund saw a major shift of its activities into climate and development lending in recent years, requiring several rounds of fundraising to increase its basic capital (or quotas) and build up trust funds to provide subsidized loans to lower-income members.
These efforts have recently borne fruit, allowing the fund to lower its lending rate for the poorest member countries. However, the IMF is increasingly running into budget constraints among its larger members, and it will need to push for better lending results. It should insist on more thorough debt restructurings before concluding programs with countries, many of which are mired in (Chinese-held) debt; some of those countries are both frequent IMF customers and known to quickly forget the promises made at the time their lending programs were concluded, spelling financial trouble. The United States and other Group of Seven (G7) countries, as the main creditors of the IMF, have the most to lose if the institution continues to extend loans that put its own balance sheet at risk.
The IMF will also need to sharpen its policy messages. Its role in economic surveillance has moved to the background in recent years, although its reports and pieces on geopolitical fragmentation (including the semi-annual World Economic Outlook) still attract interest. But the policy conclusions in those reports and policies often disappoint. For example, a recent blog post downplayed the impact that Chinese subsidies and trade practices have on strategic sectors and how those practices would provide China with advantages in a further intensification of geopolitical tensions.
The IMF’s main shareholders should therefore use the Annual Meetings to lean on the IMF to refocus its resources on where they could be most useful at this time—freeing up its excellent staff to analyze economic trends and develop useful policy solutions in an environment of geopolitical rivalry. Democratic countries around the world need its work and its independent voice more than ever.
SEPTEMBER 24, 2024 | 9:57 AM ET
The IMF-World Bank Annual Meetings in 2024: Five important issues to be addressed
The world’s finance ministers and central bank governors will be confronted with a very complex and difficult situation—including five important issues they must address. Despite intense geopolitical contention that has stymied international cooperation on many fronts, there is a chance that the gathering could lead to agreements to stabilize a volatile global economy. It is important such an opportunity not be missed.
1. Policy coordination to ensure a global soft landing
Major countries’ economies, including those of the United States, China, and many in Europe are in similar, negative cyclical circumstances. They share a common interest to engineer soft landings for their economies as headline inflation rates slow despite persistent services inflation, and employment growth weakens while unemployment rates rises. China has been particularly mired in deflation. Its gross domestic product (GDP) price deflator—a comprehensive measurement of price changes—has remained in negative territory for five consecutive quarters, amid a balance sheet slowdown triggered by a property sector crisis. All the major countries could benefit from coordinating their stimulative policy measures to generate positive feedback effects.
Doing so would be an opportune moment for the Group of Twenty (G20)—which will gather during the annual meetings—to deliver on their mission as the premier forum for international policy coordination. They could start by agreeing on a set of measures—such as coordinated easing moves—to ensure a soft landing for the global economy. In particular, interest rate cuts announced by major central banks, especially the US Federal Reserve (the Fed), would revive bond flows to emerging, developing economies. The IMF can play a catalytic role in this endeavor by providing analytical support for coordinated monetary easing coupled with appropriately supporting fiscal policy measures. At the same time, it should safeguard government debt sustainability where necessary. After all, a soft landing is the base case scenario in the IMF’s latest growth estimates, which show global GDP growing at 3.2 percent and CPI slowing to 5.9 percent in 2024.
Read the other four big issues on the docket
Further reading
Image: World Bank President Ajay Banga and International Monetary Fund (IMF) Managing Director Kristalina Georgieva attend a signing ceremony with Thailand to host the 2026 IMF and the World Bank annual meetings on the last day of the meeting, following last month’s deadly earthquake, in Marrakech, Morocco, October 15, 2023. REUTERS/Susana Vera