The IMF and World Bank Pledge to Address Climate Change and Debt Vulnerabilities
The International Monetary Fund (IMF) and World Bank issued a joint statement pledging to step up their cooperation in addressing climate change, debt vulnerabilities, and countries’ digital transitions. The statement was released ahead of the G20 leaders summit in India this week.
Collaboration to Address Global Challenges
The IMF and World Bank believe that by working together, they can help countries tackle the mounting challenges facing the global economy. These challenges include increasing climate disasters, slowing growth, and geopolitical fragmentation.
The Role of the Bretton Woods Institutions
The IMF Managing Director, Kristalina Georgieva, and World Bank President, Ajay Banga, stated that the Bretton Woods institutions are well-placed to make a critical contribution in addressing these challenges. With their universal membership and specialist expertise, they can provide valuable support to countries.
About the IMF and World Bank
The IMF and World Bank were established in 1944 at a meeting in Bretton Woods, New Hampshire. They have been working towards their mission of promoting global economic stability and reducing poverty.
Focus on Climate Change
The World Bank’s new president, Ajay Banga, aims to expand the lender’s resources to tackle climate change, pandemics, fragility, and other global crises. The joint statement emphasized the collaboration between the IMF and World Bank on climate change.
Bank-Fund Climate Advisory Group
The two institutions will formalize regular meetings of the Bank-Fund Climate Advisory Group. This group will consider climate-related developments on key projects, including loans through the IMF’s Resilience and Sustainability Trust. The trust provides financing for climate resilience and transition projects in middle-income countries.
Addressing Debt Vulnerabilities
The IMF and World Bank will incorporate climate considerations into their work on debt sustainability for low-income countries. They have been working closely on debt sustainability issues and launched a sovereign debt roundtable last year to standardize restructuring concepts and speed up debt treatments.
Strengthening Debt Management and Transparency
The joint statement highlighted the institutions’ commitment to help prevent further build-up of debt vulnerabilities. They will assist countries in strengthening debt management, transparency, and public finances. Additionally, they will provide support to creditors and debtors engaged in debt restructurings.
Promoting Digital Inclusion
The IMF and World Bank will collaborate to help countries connect their citizens to online services and reduce barriers to digital inclusion. They aim to increase the effectiveness of revenue collection and expenditure systems by leveraging new digital technologies while mitigating risks.
Improving Cross-Border Payment Systems
The institutions will work towards improving cross-border payment systems, ensuring that innovations in this area spur growth, poverty reduction, and job creation.