September 07, 2023 (MLN): The International Monetary Fund (IMF) and the World Bank will further strengthen coordination to address the global challenges including the threat of climate change, digital transition, high debt levels, limited policy space, and rising geopolitical tensions, according to the joint statement released by Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), and Ajay Banga, President of the World Bank today. 

In order to keep their focus on results, they will formalize the regular meetings of the new Bank-Fund Climate Advisory Group, tasked with ensuring coordination of climate-related work streams.

The group will meet every two months to discuss global and country-level engagements, including the results of CCDRs, country-level climate analytical work, and the pipeline of key projects and policy-based lending (World Bank’s DPLs and Fund’s RST engagements).

"We will also incorporate climate considerations in our ongoing work on debt sustainability, including through the revised joint Low Income Country Debt Sustainability Framework," the statement reads. 

Well-designed and appropriately sequenced policies are critical to help accelerate growth, alleviate policy trade-offs, and support green and digital transitions, the statement added. 

The Bretton Woods institutions have a critical role to play in helping member countries address the challenges and leverage the opportunities, working closely together and with partners.

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 statement further highlighted that the world is facing geoeconomic fragmentation, extreme natural disasters exacerbated by climate change, and increasing levels of public debt.

Rapid digitalization and technological transformations create new challenges, but also opportunities. 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 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. 

“We are committed to enhancing our collaboration to deliver tangible benefits for people, businesses, and institutions of our member countries," the statement reads. 

The World Bank’s diverse skills and experience, including sustainable growth and structural transformation and its significant footprint in client countries; the Fund with its capabilities to support macroeconomic and financial stability, and promote economic conditions conducive to growth and sustainability.

“We will do so by building on our long history of joint action and collaboration frameworks. Past efforts have resulted in strengthened coordination of policy advice to countries and the establishment of joint programs and initiatives, " it said.

There is a need to enhance further collaboration, in particular with regard to climate change, renewed high debt vulnerabilities, and digital transition.

The statement also highlighted the threats posed by climate change, security, economic stability, and development. To address this challenge, the World Bank and IMF need to help all member countries integrate their climate and development goals. 

The Bank and the Fund will promote complementarity and synergies in their climate-related works.

The Fund has adopted a new climate strategy that includes coverage of macro-critical climate issues as part of Article IV consultations and expanded technical assistance in areas where it has specialized expertise.

It has also established the Resilience and Sustainability Trust (RST) to provide affordable long-term finance to vulnerable countries implementing macro-critical climate reforms. The two institutions are successfully co-hosting the Secretariat of the Coalition of Finance Ministers for Climate Action.

The Bank and the Fund have long worked closely together on debt challenges, both in operational work in individual countries and at the global level. 

They will also deepen the support to creditors and debtors engaged in a debt restructuring and will work further with partners to improve restructuring processes, including under the Common Framework, building on the work we launched at the Global Sovereign Debt Roundtable.

The ongoing digital transition is at the forefront of development and provides a unique opportunity for countries to accelerate economic growth and connect citizens to services and jobs.

Yet in 2022, nearly 3 billion people remained offline, the vast majority of whom live in developing countries, and the wide gaps in usage of digital products between and within countries remain a challenge.

The Bank works with governments in emerging and developing countries to address regulatory and infrastructure constraints to digital inclusion and transformation and promote financial inclusion and low-cost payment systems, expand the digitalization of government services and operations.

The Fund focuses on supporting digital transformation in the financial sector to promote wider use of new financial technologies while maintaining the integrity and stability of the financial system.

"We will step up our joint work to help countries increase the effectiveness of revenue collection and expenditure systems in governments and reap the benefit of new digital technologies while mitigating the risks, including ways to improve cross-border payments, support implementation of the G20 Roadmap to enhance cross-border payments, and ensure that payment innovations spur growth, poverty reduction and job creation," it added. 

The Bank and the Fund will work with shareholders and partners to mobilize the substantial resources needed to meet the complex challenges the world faces today. 

Copyright Mettis Link News

Posted on: 2023-09-07T21:24:14+05:00