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IMF Managing Director Kristalina Georgieva speaks to the media during an International Monetary and Financial Committee press briefing on Friday, Oct. 25, 2024.
IMF and World Bank close annual meetings with urgent call for fragile economies
“The world now faces a low-growth, high-debt trajectory,” said Georgieva. Governments in developing countries now face a “trilemma” of needing to increase spending – sometimes by as much as 14% – while being unable to raise tax revenues as they face fiscal buffers exhausted by the COVID-19 pandemic and its aftermath. And she acknowledged that the Fund’s projections include “a severe, but plausible scenario” in which global public debt could exceed the baseline by some 20%.
That risk is compounded by growing political opposition to free trade, which Georgieva characterized as a “retreat from global economic integration driven by both national security concerns and the anger of those who lost out.” Reduced trade will hamper growth and push countries to borrow more to make up the difference.
These pressures pose the highest risk for sub-Saharan Africa, already struggling with high debt and lacking the levels of growth necessary to get ahead. Speaking at a separate event on Friday, the IMF’s Africa Director Abebe Selassie said the region will likely grow by 4.2% in 2025, well below the 6-7% growth rates enjoyed previously. “This pace is not sufficient to significantly reduce poverty or to recover ground lost in recent years, let alone address the substantial developmental challenges ahead,” he said.
So what can be done? World Bank President Ajay Banga gave an introspective prescription at the closing plenary: Simplify, simplify, simplify. “Development delayed is development denied,” he explained while outlining progress on reducing the time the World Bank takes to approve projects from an average of 19 to 12 months, and faster where possible. The Bank has made a substantial improvement — they’re down to 16 months — but time is money, as the saying goes, and more haste will make the Bank’s programs more effective in Banga’s view.
On the IMF’s side (often more concerned with stabilization than development), Georgieva outlined three tools: rebuilding fiscal buffers in vulnerable economies, investing in growth that can ease debt burdens, and taking a cooperative approach across borders.
Of course, much depends on factors outside the control of these development finance institutions. We’re watching how the results of the US election, the roiling debt and property market problems in China, and the conflicts in Ukraine, the Levant, Sudan, and elsewhere affect the outlook.
Can the IMF change to help more women?
When a country hits rock bottom financially, the International Monetary Fund is meant to step in with funds to stabilize the economy without damaging its society — or the gender gap. But studies show that these programs often push women out of work at a disproportionate rate to men as the economy contracts.
Alongside this week’s World Bank-IMF Annual Meetings in Washington, DC, the IMF held a policy forum on Tuesday to discuss a new tool called Gender Impact Assessments, which are designed to help build more equitable programs — and protect some of the world’s most vulnerable women.
How do IMF programs hurt women’s opportunities? In any intervention, the IMF has to consider political practicalities in its policy recommendations. All too often, said Farah Al Shami, program director for social protection at the Arab Reform Initiative, “Austerity is politically easier than implementing tax reform.” Citing examples of governments in the Middle East and North Africa, which already spend proportionally less than peer countries on social services and safety nets and have higher female unemployment, she explained that austerity measures push more women than men out of the workforce as the economy contracts, while also reducing the benefits they need. Even more politically palatable ways to raise revenue, like value-added taxation, can disproportionately burden poor women due to their regressive nature.
Why are women forgotten? Tara Povey, the gender equality and macroeconomics project lead at the Bretton Woods Project, said the approach to gender has been too “scattershot” and often falls down the priority list in negotiations. The IMF’s Gender and Inclusion Deputy Unit Chief Monique Newiak, meanwhile, said that even when gender considerations are taken into account, too much of the focus is placed on metrics like labor force participation and not enough on social aspects like child marriage and gender-based violence.
How could Gender Impact Assessments help? By reorganizing the program development process to include key questions about women — including whether policies could force more unpaid family labor on women, monopolize women’s time, or lead to more hiring discrimination — the IMF can begin tailoring more inclusive programs. Rather than suffering social setbacks, the Fund could ensure that women are at the very least not harmed, and ideally set up for greater success in a recovered economy.