GDP Center Roundup – IMF/World Bank Group Spring Meetings, 2021

Photo by Liza Pooor on Unsplash.

By Maureen Heydt

The 2020s were meant to be a decade of achieving shared sustainable development and climate goals, but instead began with a global pandemic, creating the biggest economic downturn since the Great Depression and pushing upwards of 124 million people pushed into extreme poverty. 2020 was also one of the hottest years on record, triggering extreme weather events that compounded the economic shocks of the COVID-19 pandemic. As governments have worked to respond to the crises, $24 trillion has been added to global debt, for a total of $281 trillion and the worldwide debt-to-GDP ratio at over 355 percent, constraining the ability of governments to pursue green and just recoveries from COVID-19.

Amid this global and economic instability, the International Monetary Fund (IMF) and World Bank Group kick off the Spring Meetings in Washington, D.C., today April 5 through Sunday, April 11. As the IMF and World Bank convene with policymakers, civil society and researchers from around the world, the Global Development Policy Center (GDP Center) publishes a suite of research aimed at helping countries secure the fiscal and policy space needed to support health, vulnerable communities and mount a green and inclusive recovery. See highlights from our latest research below:

The IMF COVID-19 Surveillance Monitor

One of the core activities of the IMF is to oversee the international monetary and financial system and monitor the economic and financial policies of its 190 member countries, known as surveillance. To measure the extent to which IMF country surveillance since the start of COVID-19 has identified risks and mitigation measures to help borrower countries improve health outcomes, support vulnerable people and firms and address climate change, the GDP Center and the United Nations Conference on Trade and Development (UNCTAD) designed an interactive data project, the IMF COVID-19 Surveillance Monitor. Explore the data.

The Global Financial Safety Net Tracker

What is the annual lending capacity of the IMF and how much financing have countries been able to access since the onset of the COVID-19 economic crisis? Updated with new data in March 2021 and developed in partnership with Freie Universitat, Berlin and UNCTAD, the Global Financial Safety Net Tracker tracks the annual lending capacity of the IMF, central banks and regional financial arrangements (RFAs), as well as the total amount of financing allotted to combat the COVID-19 crisis via loans from the IMF, RFAs and currency swaps to date. Explore the data.

The IMF COVID-19 Recovery Index

Also developed with UNCTAD, our interactive IMF COVID-19 Recovery Index allows users to explore to what extent the financial assistance programs initiated by the IMF since the start of COVID-19 help borrower countries combat the virus, support the vulnerable, and promote a green and inclusive recovery from COVID-19. Assigning the programs scores ranging from 0-3, the Index shows that among the 75 program begun since last March, the IMF has paid significant attention to supporting health and vulnerable communities, but support for financing green recoveries is lacking. Explore the data.


Building Back a Better Financial Safety Net

Based on workshops conducted at the GDP Center in 2020, this new report consists of ten chapters and spells out the following proposals that should be high on the agenda of the International Monetary Fund, G20, RFAs and in national capitals as the world community works to combat the COVID-19 virus, protect the vulnerable, and mount a green and inclusive recovery. Some of the recommendations made include a new allocation of  IMF Special Drawing Rights (SDRs) and expanding their use throughout the IMF; establishing a multilateral swap facility at the IMF; and a proposal for debt relief for a green and inclusive recovery that includes participation for both the public and private sectors. The report features contributions from experts at the Institute for World Economics and Politics at the Chinese Academy of Social Sciences, the Center for Social and Economic Progress in India, the Center for International Finance Studies at Central University of Finance and Economics in China, and the Centre for Sustainable Finance at SOAS, University of London. Read the report

Monitoring IMF Surveillance in the COVID-19 Era

In a new working paper, Luma Ramos and Kevin P. Gallagher explain the methodology they designed to create the interactive IMF COVID-19 Surveillance Monitor. Relying on textual analysis techniques applied to IMF Article IV consultations between 2019-2020, Ramos and Gallagher found the issues of health, support for the vulnerable and climate receive relatively small attention in IMF Article IV consultations conducted in 2019, with fiscal issues dominating the discussion. However, the consultations conducted in 2020 show significantly more attention toward the pandemic and protecting the vulnerable. Climate change and a green recovery has yet to  have a significant presence in bilateral surveillance activities. Read more.

Poverty, Inequality & the IMF: How Austerity Hurts the Poor & Widens Inequality

Among the drivers of socio-economic development, a new working paper focuses on an important, yet insufficiently understood, international-level determinant: the spread of IMF austerity policies in developing countries. Using an original dataset of IMF-mandated austerity targets, Thomas Stubbs, Alexander Kentikelenis, Rebecca Ray and Kevin P. Gallagher examine how policy reforms prescribed in IMF programs affect inequality and poverty. Their empirical analyses span a panel of up to 79 countries from 2002-2018, finding that stricter austerity is associated with higher levels of income inequality, poverty head-counts and poverty gaps. Taken together, their findings suggest the IMF has neglected the multiple ways its own policy advice contributes to social inequity in the developing world. Read more.

Climate Risk and IMF Surveillance Policy: A Baseline Analysis

The IMF has been tasked with quickly devising a climate change strat­egy that helps its members meet collective climate change and development goals while maintaining financial stability. A new working paper by Luma Ramos, Corinne Stephenson, Irene Monasterolo and Kevin P. Gallagher uses textual analysis algorithms to perform a baseline analysis of the extent to which the IMF’s main bilateral surveillance activities — Article IV reports and Financial Sector Assessment Programs (FSAPs) — focused on climate risks between 2017 and 2021. The authors found that IMF surveillance activity has paid little and uneven attention to climate risks in Article IV reports, and even less so in FSAPs. However, recent Article IV and FSAP assessments have piloted climate risk analyses that present an opportunity to be expanded and incorporated systematically in future IMF assessments. Read more.

Climate Change and IMF Surveillance: The Need for Ambition

A new policy brief from Kevin P. Gallagher, Luma Ramos, Corinne Stephenson-Johnson and Irene Monasterolo outlines the macro-critical aspects of climate change that will need to be incorporated into IMF surveillance activity and examines the extent to which climate risks have been a part of IMF surveillance in recent years. The reviews of Article IV surveillance and FSAPs are currently underway and are a critical opportunity to bake climate change considerations into the IMF’s policies for the next 7-10 years. Once the policies are updated, they will be locked in for that amount of time. Therefore, the authors argue it is imperative that the IMF recognize the macro-critical threats to both physical and transition risks within and across countries and work to align IMF surveillance policy with ambitious climate change goals. Read more.

IMF Austerity is Alive and Increasing Poverty and Inequality

For years, researchers have debated the IMF use of austerity, or required fiscal budget tightening: how common it is, which borrowers receive such requirements, whether IMF practice has changed after successive financial crises, and what impacts such austerity has had. Pushing these questions further, Rebecca Ray summarizes two new working papers from the GDP Center that use a new dataset of 154 IMF financial agreements over 18 years, showing that IMF-mandate austerity has not diminished in intensity since the 2008/09 financial crisis and that borrowing countries are more likely to face austerity if they are host to significant foreign direct investment (FDI), particularly from Western Europe. Additionally,  she summarizes research showing IMF austerity is associated with increasing levels of income inequality and poverty in borrowing nations. Read more.

Assessing the IMF’s COVID-19 Priorities: Health, Support for the Vulnerable, and Climate Change

Summarizing the research behind the IMF COVID-19 Surveillance Monitor, Luma Ramos discusses the methodology and main findings on the extent to which IMF country surveillance has identified risks and mitigation measures to improve health outcomes, protect vulnerable people and firms and address climate change since the onset of the pandemic. With Kevin P. Gallagher, she found that while the Fund has provided support for health and vulnerable people, it has paid uneven attention to climate change. Moreover, their research found that where the IMF has provided advice on health, vulnerable communities and climate change, it has been nearly exclusively to high-income countries. This asymmetry in guidance and surveillance means that low-income countries who are most need of the IMF’s advice are receiving fewer recommendations and assessments in these subjects than their high-income counterparts. Read more.

The IMF, COVID-19 and Climate Change

As the only global institution tasked with preventing and mitigating global financial instability, the International Monetary Fund (IMF) has been called upon to play a crucial role in combatting the effects of two simultaneous crises: COVID-19 and climate change. Since the inception of the crisis, the IMF has provided strong global thought leadership in stressing that the path forward lies in attacking the virus, protecting the vulnerable, and mounting a green and inclusive recovery. On Wednesday, April 7, join GDP Center and experts from the IMF’s Independent Evaluation Office and Freie Universitat, Berlin for a webinar discussion and interactive demonstration on IMF surveillance, COVID-19 and climate change. Register to attend.

Why We Need a New Multilateralism for a Global Just Recovery

As part of the Global Just Recovery Gathering, Katie Gallogly-Swan, Policy Coordinator for the GDP Center and UNCTAD, will facilitate a panel of experts on why a new multilateralism is needed for a global just recovery on Friday, April 9 at 6:15 AM EDT. Featuring experts from Public Services International, UNCTAD, Southern African Trust and the Third World Network, the webinar will explore the crucial dimension of multilateral governance in enabling or preventing just recoveries and the urgent agenda to rebuild the rules of the global economy toward shared prosperity and climate justice.  Register to attend.