International Monetary Fund (IMF) Chief Kristalina Georgieva called Monday for wealthy nations to provide more support to debt-saddled developing countries, as she opened the first IMF-World Bank meetings on African soil in 50 years.
The week-long talks in the Southern Moroccan city of Marrakesh come as the IMF and World Bank are facing calls to reform in order to better help vulnerable nations deal with poverty and climate change.
The global lenders traditionally hold their annual gathering of finance ministers and central bank governors outside their Washington headquarters every three years. 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 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.
“Bringing the meetings to Africa, again, is symbolically and substantively very important,” Georgieva said at a meeting with members of civil society organizations.
She noted that the continent is wrestling with “remarkably similar” problems as 50 years ago, including high inflation and “political upheaval in many places”.
“Many countries are under a burden of debt that can crush them and we very, very much hope that the meetings would be a place to build more trust among nations. We all need each other,” she added.
The IMF and World Bank need “more capacity” to support countries that need help, including providing zero-interest loans “on a larger scale”, Georgieva said.
Quota system
She reiterated plans to reform the institution’s quota system to direct more funds to lower income nations.
The quotas, which are based on economic performance, determine how much funding a nation should provide to the IMF, its voting power and the maximum amount of loans it can obtain.
The reforms would seek to free up funds that wealthier nations would never need so they can go to developing countries instead.
But the Western powers do not want the changes to lead to a redistribution of votes that would give China more leverage.
The World Bank 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 finaliZed in Marrakesh.
In a symbolic move, the IMF and World Bank are poised to give Africa a third seat on their executive boards.
‘Neocolonial legacy’
Georgieva faced a grilling from representatives of NGOs.
One member of Christian Aid said the quota system reflected a “neo-colonial” and “racist” legacy while others complained that the IMF was imposing austerity measures in countries that sorely needed public spending on health and education.
“I hear many of you saying, ‘oh, you’re for austerity’. No we are not,” Georgieva replied.
But let’s face it, in your household, you cannot spend more than you earn. When you borrow, you have to pay back. The same applies to governments,” she said.
Allana Kembabazi, program manager at the Uganda-based Initiative for Social and Economic Rights, told AFP she was disappointed by Georgieva’s response.
“I think it’s a lot of the same things and I’m very worried because Covid-19 should have showed us more than ever it’s important to prioritise health systems, education and social protection,” she said.
“I want a rethink of this system.”
Outside the venue, a dozen activists protested, holding a banner that read “World Bank end fossil finance” and signs including one that said “dignity not debt”.