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By Victor MUJIDU
The World Bank, and the International Monetary Fund (IMF) are meeting this week with key talking points over high inflation, rising geopolitical tension, and financial stability lined up for discussions.
“Growth remains historically weak now and in the medium term,” IMF managing director Kristalina Georgieva said during a speech last week.
The uncertainties have led to a decline in global growth to below three percent this year and it is expected to remain at close to three percent for the next half a decade.
Nearly 90 percent of developed world economies will slow down this year while Asia’s emerging markets are expected to rise their economic output with India and China predicted to account for half of all growth.
Georgieva told AFP last week that central banks should continue battling high inflation through interest-rate hikes, despite concerns that it could further inflame the banking sector.
“We don’t envisage, at this point, central banks stepping back from fighting inflation,” she said in an interview held on Thursday.
“Central banks still have to prioritize fighting inflation and then supporting, through different instruments, financial stability,” she added.
According to Mrs. Georgieva, countries with low income will suffer a blow from high borrowing rates, and a fall in demand for exports which may result in poverty.
The expected spring meeting will be held against the backdrop of high inflation and ongoing concerns about the health of the banking sector following the downfall of Silicon Valley Bank.
Ahead of the spring meetings, the IMF and World Bank also called on wealthier countries to help plug a $1.6-billion hole in a concessional lending facility for low-income countries that were heavily used during the Covid-19 pandemic.
Many low-income countries are now facing mounting debt burdens due in part to the higher interest-rate environment.
There will also be a meeting on Wednesday to address war-torn Ukraine’s recovery and reconstruction needs, with the World Bank estimating the country faces an “additional” $11 billion funding shortfall this year.
The spring meetings also provide an opportunity to make progress on an ambitious U.S.-backed agenda to reform the World Bank, so it is better prepared to tackle long-term issues like climate change.
U.S. Treasury Secretary Janet Yellen told AFP she expects member states will agree to update the World Bank’s mission statement to include “building resilience against climate change, pandemics and conflict and fragility,” to its core goals.