Stockholm (NordSIP) – The dominating theme among the world’s public finance elites at the joint World Bank-IMF 2023 annual meeting that took place last week in Marrakech, Morocco, was resilience.
WB Turns to Face the Wind
On the occasion of the annual joint meeting, World Bank (WB) President Ajay Banga announced a vision for the WB to help create a more sustainable, resilient and livable world free of poverty.
“The World Bank is turning to face the wind. That evolution began months ago, and today there is a new vision and mission for the World Bank. To create a world free of poverty – on a livable planet. But time is of the essence. This urgency motivated us to write a new playbook – a new mission. One that will drive impactful development and lead to a better quality of life – access to clean air, clean water, education and decent health care. It is a mission that is inclusive of everyone, including women and young people; Resilient to shocks, including against climate and biodiversity crises, pandemics and fragility; And sustainable, through growth and job creation, human development, fiscal and debt management, food security and access to clean air, water, and affordable energy,” Banga told the 2023 Annual Meetings Plenary.
For the IMF, the focus was on climate cooperation and more ambitious climate action.“We need to move from the culture of pointing fingers to the culture of holding hands. We are in this together,” IMF Managing Director Kristalina Georgieva, speaking at a climate-change seminar.
Countries will need a new mix of policies with carbon pricing at the center of their policies if they hope to deliver on global climate goals while avoiding soaring public debt, according to the IMF’s Fiscal Monitor report released during the joint meeting. Discussing the carbon reduction goals set by countries around the globe, the report was less than enthusiastic. “Current national objectives and policies will fail to deliver net zero emissions, with potentially catastrophic consequences,” Vitor Gaspar, director of the IMF’s Fiscal Affairs Department.
According to the IMF’s Fiscal Monitor, “containing global warming (…) necessitates a radical economic transformation that could impose costs and benefits unevenly across people, firms, regions, and countries. With private financing playing a decisive role, the transition to low-carbon energy sources will require strong complementarities between public and private actors.”
The reality of prevailing global monetary policy conditions was central to the IMF’s focus on the private sector. “Scaling up the current mix of climate policies, which relies mainly on subsidies and other spending measures, could increase public debt by as much as 50 percentage points of gross domestic product by 2050,” Gaspar said. Worldwide, debt levels are generally elevated, and borrowing costs are climbing, making it more difficult for countries to devote adequate budget space to climate action.
