IMF and World Bank hold first meetings in Africa in 50 years

The IMF and World Bank began talks in Morocco Monday in their first annual meetings on African soil in 50 years, under pressure to reform to better aid poor nations blighted by debt and climate change.

The International Monetary Fund and World Bank traditionally hold their annual gathering of finance ministers and central bank governors outside their Washington headquarters every three years.

The southern Moroccan city of Marrakesh was supposed to host it in 2021, but the gathering was postponed twice because of the Covid pandemic.

A powerful earthquake that killed nearly 3,000 people in the region south of Marrakesh last month threatened to derail the event again, but the government decided it could go ahead.

“The country has gone through a very tough time just a month ago,” IMF Managing Director Kristalina Georgieva said as she opened a panel discussion titled “Africa Inspired”.

“But it came out of it more united, more resilient,” said Georgieva, who earlier visited schoolchildren in the Atlas region whose schools were destroyed but were now back in class or in temporary facilities.

The IMF and World Bank last held their meetings in Africa in 1973, when Kenya hosted the event and some nations were still under colonial rule.

Half a century later, the continent faces an array of challenges ranging from conflict to a series of military coups to unrelenting poverty to natural disasters.

“We’re here, Africa,” Georgieva said at the panel discussion featuring three women entrepreneurs from the continent.

“It was of course right that we would look for inspiration coming from the incredible young women on this continent,” she said.

Tougher discussions await officials at the meetings this week.

In a symbolic move, the IMF and World Bank are poised to give Africa a third seat on their executive boards, which Georgieva has said would give the continent a “stronger voice”.

But the thorniest issues revolve around money.

The main contributors are not in favour of a capital increase as it would force them to put up more funds and would give greater influence to emerging powers such as China and India.

The World Bank, however, is expected to confirm plans to boost lending by $50 billion over the next decade through balance sheet changes.

World Bank President Ajay Banga wants to go even further and raise capacity by $100 billion or as much as $125 billion through contributions from advanced economies.

But the issue is unlikely to be finalised in Marrakesh.

The global lenders may use the meetings to reform their quota systems.

The quotas, which are based on a country’s economic performance, determine how much funding they should provide to the IMF, their voting power and the maximum amount of loans they can obtain.

- ‘Same old failed message’ - A dozen activists protested outside the venue, holding a banner that read “World Bank end fossil finance” and signs including one that said “dignity not debt”.

NGOs say the austerity-driven solutions offered by the IMF and World Bank are only widening the gap between the rich and the poor in the developing world.

Campaigners say global lenders should focus instead on cancelling the debts of the poorest nations and imposing taxes on the rich.

Oxfam said 57 per cent of the world’s poorest countries have to cut public spending by a total of $229 billion over the next five years.

“The World Bank and IMF are returning to Africa for the first time in decades with the same old failed message,” said Oxfam International executive director Amitabh Behar.

“The IMF is forcing poorer countries into a starvation diet of spending cuts, driving up inequality and suffering,” he added.

Meanwhile, World Bank President Ajay Banga will come under pressure this week to focus on climate change, but the former Mastercard CEO first needs to get shareholders in line on how to grow the bank.

Banga, just 130 days into the job, has a mandate to broaden the multilateral development lender’s mission to tackle global crises including climate change, pandemics and fragile states.

But with annual climate transition finance needs estimated at up to $3 trillion for emerging market and low-income economies by 2030, development advocates are calling on him to make tackling global warming the priority at his first World Bank and International Monetary Fund (IMF) annual meetings.

A G20-commissioned panel of experts recommended in July that the World Bank and other multilateral development banks (MDBs) increase annual lending by $260 billion, more than three times their current pace, to help meet climate needs.