International Monetary Fund (IMF)

  • Economics
    The IMF and World Bank Spring Meetings: What to Know
    The IMF and World Bank’s spring meetings will focus on the prospects for a soft landing after years of global economic turbulence. But major challenges remain, including growing climate finance needs and persistently high global debt levels.
  • Economics
    The IMF Needs to Focus on Setting Good Targets for External Debt Sustainability
    The IMF has two frameworks for assessing debt sustainability. The market access country framework is more technically advanced, but it isn't delivering reasonable targets for debt restructuring cases. Sri Lanka is a case in point.
  • International Organizations
    What Is the IMF?
    The International Monetary Fund, both criticized and lauded for its efforts to promote financial stability, continues to find itself at the forefront of global economic crisis management.
  • China
    China's Current Account Surplus Is Likely Much Bigger Than Reported
    The IMF needs to focus on China’s external account in its surveillance. The reported current account surplus appears to be significantly too low.
  • International Finance
    The World Needs a Second Channel for Using SDRs
    The multilateral development banks need to develop a second channel for mobilizing the world’s under-utilized special drawing rights (SDRs).
  • Economics
    The State of Sovereign Debt Restructuring After the Meetings in Marrakech
    Some fundamental problems with the IMF’s Common Framework for debt restructuring have become apparent. Not the least, debt restructuring shouldn't just be an issue for low-income countries.
  • Morocco
    Virtual Media Briefing: The World Bank and IMF 2023 Annual Meetings
    CFR experts discuss the 2023 Annual Meetings of the World Bank Group and the International Monetary Fund, taking place this week in Marrakech, Morocco. GOODMAN: My name is Matthew Goodman. I recently joined CFR as director of the Center for Geoeconomic Studies here.  Delighted to welcome you this morning to this event on the World Bank and International Monetary Fund annual meetings that are currently underway in Marrakesh, Morocco. This is an annual—actually, it’s really a semiannual event in practice because there’s also a set of spring meetings here in Washington every year. But this is a big event in the world of international monetary and development affairs, and we—there’s a lot at stake. Obviously, there’s going to be a lot of discussion in these meetings about global—the global economy and global growth, which is already troubled but is now facing a second major war that is going to be presumably disruptive. We’re going to talk a little about that, I think. You know, there are debt issues. There are climate change and other major transnational challenges. And then, you know, this is all against the backdrop of changes in the global order, as it were, where you’ve seen fragmentation among the different countries that are, you know, major players in the global economy.  And so I think we’ll try to explore all of this with a terrific couple of colleagues of mine whom I think are familiar to this group.  They are Benn Steil, who is a senior fellow and director of international economics here at CFR, author of a forthcoming book—am I allowed to preview that, Benn?  STEIL: Sure.  GOODMAN: —on Henry Wallace. But he’s written a lot about the origins of these two institutions in the—at the—towards the end of World War II. So a great person to have on this call.  And then Heid Crebo-Rediker, who is adjunct senior fellow here at CFR and also has long experience in international economic policy, including serving as chief economist at the State Department—the first chief economist at the State Department, I think. Right, Heidi?  So a couple of housekeeping notes. This event is on the record and there will be a video posted on after the event. The run of show: We’re going to have a conversation here. I’m going to have a conversation with Benn and Heidi for about twenty-five minutes, and then I will invite questions and answers from the group. If you would like to ask a question, there should be a button at the bottom of your screen allowing you to raise your hand. And I will recognize people in the order that I see them. And I think that is all I need to say as introduction, so let’s just jump in here.  And, Benn, let me start with you and ask, kind of what do you think are going to be the big issues that will be under discussion this week in Marrakesh?  STEIL: Matt, you mentioned a dozen or so in your opening. I’m sure we can drill down into a number of those. But there are two that I would highlight that I think will dominate discussion, and they’re intimately related. The first is the resources—the financial resources that the two institutions, the IMF and the World Bank, can bring to bear. There’s broad consensus that this needs to be increased. But the second is the governance of the two institutions. And for better or for worse, those two issues are intimately related.  Without going at least initially too deeply into how the quota system works in the two institutions, it is different in some regard. Borrowing capacity, for example, is separated from quotas in the World Bank whereas it’s intimately linked within the IMF. In both institutions, quota is how much resources you put in relative to the total resources determines your voting power. And in both institutions—this is the way they were designed after World War II, predominantly, of course, by the United States—the United States currently has sole veto power when it comes to major policy decisions. It exercises that power because it is the only country with over a 15 percent voting share.  Now, to increase the resources available to the two institutions, the neatest, cleanest way to do this is to increase the total quota. And if you simply did that proportionately, you wouldn’t affect the voting shares of the individual nations so you could sidestep that particular issue. But given how small China’s voting share is right now—it’s a little over 6 percent in both institutions, which is just over a third of the U.S. share—naturally, China wants a larger voice, a larger share of the total quota.  The United States and its Western allies aren’t against that in principle. Obviously, the United States wants to maintain its veto power and wants to maintain sole veto power, but it is willing to give China, in principle, a bigger say. But there are broad concerns about the extent to which China is really dedicated to the mission of the two institutions, particularly because China has been a barrier to debt restructurings in a number of crisis-hit countries and China has not exactly been an exemplar in terms of financial transparency when it comes to its foreign-exchange holdings.  So, again, even though there is broad consensus that we should and can raise the resources available to these two institutions, going forward with that agenda will be very difficult because of the governance issue. And then we also have the political dysfunction in the U.S. right now, which will make it very difficult for the Biden administration to secure from Congress new funds for the institutions.  GOODMAN: Great. OK. Well, that’s a really important issue that maybe we can explore a little further as we—as we go forward, and there are some other issues you touched on that I want to dive in a little more deeply.  But, Heidi, is there anything else that you’re look at that you think is going to be an important subject in Marrakesh?  CREBO-REDIKER: So a couple of things.  One, I would say that the Biden administration has really put the reform of the MDBs—and particularly, you know, I guess in a sense putting the IMF back in the box a bit with the new leadership of Ajay Banga taking on really the mixture of ending poverty and on a livable planet, so the interconnected challenges of tackling poverty, development, and climate change. The IMF had really put a lot of resources into climate over the past five or six years, and so this is really, I think, a chance for the reforms—which will, you know, hopefully support significant new funding that Benn was alluding to—to be driven, appropriately, by the Bank in its capacity in its core mandate and by the Fund very, very separately, but going back to its core mandate.  The second thing I would say—and we can get—we can get into some of the details—but there’s a very significant long shadow of the geopolitical backdrop. You have—I mean, the buzzwords is fragmentation, but the U.S.-China competition issue is really—you know, it’s—it is driving a lot of the decisions on how we think about quota, as Benn alluded to—how we think about whether or not things like the Common Framework for Debt Restructuring, actually, they’re dysfunctional. And one of the big opportunities, I think, of this particular annual meeting was a new sovereign debt restructuring roundtable that was meant to be as inclusive of all different parties—Paris Club, you know, private markets, important bilateral lenders. And I—from what I heard today, the Chinese foreign minister—finance minister did not show up to these IMF meetings, and one of the challenges is to really get comparable treatment on—I mean, that’s what all of these—the framework is meant to do. And just this morning, it was announced that Sri Lanka and China’s Ex-Im Bank actually cut a side deal and basically blindsided everybody, so it basically tanked the whole concept of coming up with some kind of a—you know, a constructive multilateral framework.  Second on geopolitics, Russia’s invasion of Ukraine. It’s driven inflation, food insecurity, energy insecurity. And then a big—you know, a question for those focused on Ukraine is, really, is the U.S. going to continue to fund and anchor Ukraine’s military and budget support as an anchor to other multilateral and bilateral institutions?  And then the big news, obviously, is the terrorist attack in Israel. It’s had very little, you know, to-date impact on markets, except for a flight to quality. But as this has the potential to widen, will this have an impact on inflation, pushing commodity prices, oil, and gas prices up? And, you know, God forbid, if Iran actually gets more directly involved. Some of the grumblings that I’ve heard have been the pretty muted statement condemning the attacks coming out of the two key institutions.   So we can talk also about the big macro takes. I think there’s a lot more good news buried in the WEO this year than might be the case in the headlines, but handing it back to you.  GOODMAN: Well, let me—let me ask you about that. So, first of all, for the viewers that don’t know the vocabulary, the WEO is the World Economic Outlook, which the IMF issues around each of these meetings. And they have—they have downgraded their forecast for global growth to a little below 3 percent, I think, for next year, and well below the kind of historic average was closer to 4 (percent), I think. And so that’s sort of—and that’s against the backdrop of a lot of the things you’ve already touched on. But fundamentally, you know, it’s—you got a picture where the U.S. is about the only economy that is—that is actually doing pretty well in terms of growth, for now. Though, that’s a question about how long that’s going to last.   You know, China has been slowing and troubled by, you know, real estate-related financial issues and other challenges. Europe is not doing well. And the emerging markets are strained by all of the things that you touched on, Heidi, and some others as well. And now we’ve got, you know, the second conflict in the Middle East, after the one in Ukraine. So there’s a lot of uncertainty and disruption. You know, you just struck an optimistic note or said there’s some positive things in there. So can you just give us a couple of more hopeful, happy things to look at there? And then I’ll ask Ben the same question.  CREBO-REDIKER: Sure. So I guess, you know, the good news is that we haven’t entered a—you know, we haven’t seen the recessions that were anticipated six months ago. We’ve navigated some pretty significant shocks. And then, you know, so the U.S. has been—has been resilient, and has—you know, they’re expecting a soft—more or less, a soft landing, strong labor market. So more resilient than expected. And, you know, emerging markets—large emerging markets were sort of ahead of the game in tightening. So some of the bigger challenges that we—that we could have seen, I think, we—this has not fully played out yet, but it was better than unexpected, the emerging picture coming out of this world economic outlook.  Inflation is uncomfortably high. And I think they’re looking at a global expectation for inflation next year at 5.8 percent. But it’s very hard, you know, to put that kind of a number together, because there’s so much differentiation between different countries. And China, really, you know, that’s one of the biggest question marks. Will the property crisis get much worse? And what the—what are they going to be the spillovers into emerging markets? And that sort of weaves back into the to the geopolitical risk again.  GOODMAN: So, Ben, picking up on this sort of macro picture, and, you know, inflation and monetary policy, which you track closely, I mean, how do you see that unfolding? And what are the—you know, what are the—what does it say about the prospects for, you know, broader global economic growth? And, you know, I mean, if you want to predict what the Fed’s going to do in the next year I’m interested, because that’s going to guide a lot of the rest of the world. But how do you see that outlook?  STEIL: Well, the inflation picture, the growth picture in the United States, are better than we might have expected, say, six, nine months ago. And that’s clearly a positive. Financial conditions have obviously tightened considerably in recent months. And that’s without the Fed doing anything to add to it. That’s the market acting. And that very well may slow economic activity in the United States, which really is the driver of global growth right now, significantly. So that’s something to watch. But I think that at least on the inflation front, the picture is more optimistic than might have been drawn six, nine months ago.  GOODMAN: Yeah. And then you’ve got hanging over the U.S.—and we haven’t touched on this—but, you know, debt—a major, you know, debt challenge here in the U.S. And maybe—you know, there’s been a concern about that for many years, but now a lot more concern just given the absolute size of it and some of these other uncertainties.  STEIL: And it’s driving the tightening of financial conditions in the private markets right now. So, you know, government debt is really back on the agenda in a major way.  GOODMAN: And, you know, there’s also, as you touched on earlier, political dysfunction which raises questions about whether, you know, just in as much as a month from now or a little over a month, we’re going to be back in another—another crisis moment. So there’s a lot to worry about.  OK, let me shift, because there were some other topics I want to make sure we cover or get back into. So let’s talk about the debt situation for a second in the emerging world. Heidi, you’ve given us some breaking news about Ex-Im—China, Ex-Im, and Sri Lanka. This is contrary to a slightly more hopeful direction on Zambia, another country that had defaulted a few years ago on which China’s seem to be playing ball with others, and that it looked like, you know, this was a case where, you know, the common framework, which was this G-20-agreed approach a couple of years ago, was actually possibly going to get some life or wind behind it.  You know, what—you’ve, again, touched on it, but do you want to elaborate a little on what you—what you think is going to be the discussion in Marrakech about these issues, and whether there’s going to be any attempt or actual ability to bring, you know, the major creditors, including, by the way, the private sector, to the table? A lot of private sector in Marrakech, by the way, but there’s a lot of fringe events going on around the actual core institutional meetings. So, sorry, go ahead, Heidi.  CREBO-REDIKER: So, I mean, China is the world’s biggest bilateral lender. But I think, you know, to all of the hailing of progress and constructive conversations, particularly around Zambia, particularly the, you know, as the—as the—one of the most followed negotiations within the common framework, I have to say that I think that three years in saying that there’s victory and constructive collaboration because there’s an MOU which has not been acted upon, is quite underwhelming. And so, you know, I think it really does beg the question of whether or not we can have constructive conversations around a global multilateral table that includes the private sector, and the Paris Club, and large bilateral lenders, and try and do something for countries in debt distress that are able to put them on a better—on a better path.  So, you know, I—whereas I think that the WEO struck sort of a good news/bad news. I’m less optimistic that we’re going to see constructive negotiations, even though I think everybody’s hopeful. Three years in is really—you know, we’re still—we’re still nowhere.  GOODMAN: And you do have a number of countries beyond Sri Lanka and Zambia that are in trouble. I mean, sort of perennials like Argentina, you know, Pakistan, and others. But a number of others. And there’s one other issue, which is that this common framework is really—as applied initially—was really only for lower-income countries, right? Not for middle income. Sri Lanka is a country that, in theory, doesn’t qualify for the common framework. Is that something that’s going to be discussed as a possible change to deal with some of these other—  CREBO-REDIKER: Sure. Well, I think that was the ambition of this sovereign debt restructuring roundtable that really brought together the right parties. And I think they were planning a big launch at this annual meeting. And so, you know, the hope was that that would be the platform, that you could really see constructive negotiation. I think it is—it’s a—it’s unfortunate that the Chinese finance minister did not come to these meetings because the PBOC is not—  GOODMAN: The People’s Bank of China, the central bank.  CREBO-REDIKER: Exactly. They don’t—they don’t actually—they don’t speak for the negotiations that are happening on debt restructuring. So as constructive, you know, as remarks might come from them, it’s really the finance ministry that needs to take the lead on this.  The bigger question, I think, for—not just for debt for countries in debt distress, but more broadly, is where is all this funding going to come from? You know, it’s not just—it’s not just from additional quota and from, you know, extending balance sheets, and additional financing capacity and capital, broadening capital adequacy. So all of that is part of the, you know, the meat and potatoes of the discussions on MDB reform, but you need to get the private sector in there. And that’s been a perennial challenge.  And then at the end of the day, with some of the poorer countries, you need to have concessional funding, because you can’t just layer debt upon debt upon debt when you have high interest rates, where you have, you know, fiscal constraints that are tremendous with poor countries. And they face the biggest challenges from poverty, to climate, and adaptation, as opposed to what would be, like, a financeable type of climate transition in a in a different—a different kind of country.  GOODMAN: And the numbers we’re talking here are in the trillions. I mean, in fact, that independent experts group that Larry Summers cochaired, you know, was talking about, you know, multiple trillions over the next several—I’ve forgotten the time period—but something like 500 billion (dollars) a year of new funding needed, much of that from MDBs, but, you know, from elsewhere, as well. And there’s a real question whether those numbers are realistic. Ben, do you have thoughts on all of this? You did introduce the idea of resources. And so how do you—  STEIL: Yeah, I think the area I want to jump in is on one particular heavily indebted country that I think really nicely illustrates the growing tensions between the Bretton Woods institutions on the one hand, and China. And that’s Pakistan, which is enormously large. Now, I mean, they—you know, the World Bank and the IMF have made many mistakes over the generations. But broadly, they exist to promote financial stability, poverty alleviation, and good governance. And China has other priorities. In the case of case of Pakistan, it was clearly a major beneficiary of Chinese lending, because it’s important geostrategically to China. It is an enemy of one of China’s enemies, major enemies—India. And we don’t have, broadly speaking—“we,” United States, “we,” the West, “we,” the international community do not have much say there.  Now Pakistan has borrowed many tens of billions from China. It is—a number of those projects have gone bad. And then Pakistan, of course, turns around and comes to the IMF and says: We need help now. How do we deal with situations like that? Of course, the IMF is supposed to be there to help countries in crisis, but China was the one who created this crisis. So dealing with those growing frictions between the Bretton Woods institutions and China, which has its own geopolitical priorities is, in my view, unfortunately, only going to get more difficult in the coming—  GOODMAN: And are we likely to see—I mean, as Heidi said—fragmentation is kind of a buzz phrase or a euphemism for all this. But, I mean, let’s actually literally talk about is there a risk of fragmenting this system that’s been in place for, you know, seventy-five years, or whatever, with, you know, China setting up new—and they have set up a new multilateral development bank, the Asian Infrastructure Investment Bank. Actually, more than one, also—  STEIL: The BRICS bank, which is technically called the New Development Bank, absolutely.  GOODMAN: But they haven’t—they haven’t challenged, at least yet, the IMF centrality.  STEIL: No, but Belt and Road obviously has. We’re talking about roughly a trillion dollars in lending over the past ten years. So it’s become a major competitor to the World Bank, first in terms of developing lending. And then because so many of these loans are going bad it becomes a competitor and a conflict generator with the IMF, that’s left to clean up the problems.  GOODMAN: Yeah. And it doesn’t feel—you touched on again—more than touched on, you discussed the quota issue and the challenges there. I mean, you didn’t say quite so clearly, but it’s, I’m sure you would agree, that it seems pretty unlikely that there’s going to be a twain—sorry. (Laughs.) I just let my lights go off. I’m the newbie here, and so my office is still unfamiliar to me. I hope you can still see me.   You know, a twain between, on the one hand, China’s desire for more voice and, you know, centrality in these institutions, and specifically more shares, and on the other hand, frankly, even if you say the administrations over time have understood the need to and willingness to sort of talk about reallocating those shares, I mean, the U.S. Congress—it doesn’t seem like this U.S. Congress, at least, is going to be, in a realistic sense, considering any way that we’re going to reallocate or, you know, give China any additional benefit in the system. So it feels like this is not going to be an area for, you know, compromise, or getting global governance going again in a more concerted, coordinated way, right?  STEIL: No, I mean, I can’t see that, both from a geopolitical perspective. China is not seen any more in Congress as being a responsible player in the international financial community. And that’s a problem in terms of giving China greater voice within the two Bretton Woods institutions, because the last thing we want to see, broadly speaking, is the IMF and the World Bank turned into a global Belt and Road, pursuing China’s geostrategic gain. But then, there’s the issue that even if we can get agreement just to do a proportionate increase in quotas that wouldn’t affect the allocation of votes, Congress is just not in a cooperative mood right now. So the Biden administration is anxious to go forward with greater funding for the two institutions, but Congress is not in cooperation mode. And that undermines the ability of the United States to drive the agenda in Marrakech, because other countries say to us: Well, you can’t deliver on any of your promises. And this is a big problem.  GOODMAN: Yeah. In a couple minutes I’m going to invite questions, so if you have questions get yourself ready and prepare to—or, go ahead and raise your hand. But, first, just—I mean, the other issue that China is a critical player on is climate change. Heidi, and this, as you mentioned, is a topic that is going to be discussed in Marrakech or is being discussed in the context of multilateral development, bank reform, and specifically the Ajay Banga soundbite, in a way that you—that you mentioned. That, you know, he thinks that the World Bank can continue to—and should continue to address poverty, while also enabling a livable planet. Which is, you know, an allusion to these global public goods, starting with climate change but also, you know, healthy—a healthy planet and other global public goods.  So is that going to be—is that where the next—the conversation about climate’s going to happen? And do you expect any, any progress on that, or on any other dimension of the climate story in Marrakech?   CREBO-REDIKER: I think it’s going to be a running theme throughout the meetings, because it is it is a top challenge. And, again, sort of separating the climate finance part of financeable projects in certain more developed markets versus, you know, what role the—not just the World Bank, but the regional development banks. Because, you know, they’re part of—part of this matrix as well.  GOODMAN: Like the African Development Bank, Asian Development Bank, the Inter-American—  CREBO-REDIKER: Asian and Inter-American, exactly, and the EBRD. And so, you know, what—you know, how these institutions can actually support other types of finance for more developed emerging markets, tackling effects risk, trying to figure out what kind of insurance mechanisms, where were different existing tools can be expanded. But also a huge focus on the concessional side. I mean, how do, you know, the poorest countries in the world who don’t have the money for investment in the types of things they need to do to tackle, you know, adaptation, you know, for rising, you know, rising seas, and flooding, and try to actually build in, you know, to the—you know, to their own investment, mitigation for it. That’s going to have to come in concessional funds. And it will need to come from the development banking system because—or bilateral funding from donors—because it’s just not—it won’t—it won’t otherwise—it won’t otherwise work.  GOODMAN: Yeah. I don’t know if you want to add anything, Ben, on those.  STEIL: Just a few comments. I think there is a pretty strong consensus that the World Bank has to make climate change a significant issue, to the extent that the World Bank continues to be a major funder of infrastructure projects in the developing world. It’s important to the planet that those not contribute materially to carbon emissions. There’s a lot more dispute about the extent to which the IMF should be moving into this area. For example, former First Deputy Managing Director Anne Krueger has been quite outspoken about the need for the IMF to stay in its lane and focus on financial stability. So even if you take climate change very seriously, it is not clear that this should be a role for the IMF, whereas it’s much clearer that it has to be for the World Bank.  GOODMAN: OK. I am going to ask Hannah if you want to introduce the Q&A part, and tell us how this works.  OPERATOR: Absolutely.  (Gives queuing instructions.)  Thank you, Matthew.  GOODMAN: OK. I want to challenge—I know there’s some good reporters on this call. And you guys are usually not shy. So feel free to ask questions. While you’re thinking about that, let me ask—this is the first meeting on the continent of Africa, IMF, World Bank meeting, I think in fifty years, since the early ’70s. There was one in Nairobi. And I think Morocco is definitely trying to—against the backdrop of this tragic earthquake that they had not—just last month, they’re trying to present both Morocco as a stable, you know, successful country, and with leadership capabilities in the region, but also to highlight Africa as a centerpiece.   I mean, we’ve implicitly talked a lot about these issues because we’ve talked about Zambia and some of the other challenges. Many of the debt challenges are in that part of the world, a lot of the climate change issues hit Africa in particular hard—particularly hard. Health and other things as well. So does either of you have thoughts about, you know, the significance of this being a meeting in—on the African continent? And how that’s going to shape the debate?  STEIL: I’ll jump in there briefly. I mean, one thing I think that will come out of Marrakech on the governance side is African countries getting a third seat on the executive board in the World Bank. I mean, that won’t make an enormous difference in terms of governance and how funds are allocated, but I think it will be—it will be symbolic. And it will help ensure that African development issues feature somewhat more prominently as the agenda under new leadership at the World Bank goes forward.  GOODMAN: Mmm hmm. Heidi, any thoughts?  CREBO-REDIKER: So, again, we touched on a lot sort of thematically throughout our conversation, but it’s incredibly symbolic that this meeting did go forward and it is held on the African continent. A lot of the programs that that both the IMF and the World Bank undertake are on the African continent. And a lot of the technical support that both institutions provide. The potential for upgrading how domestic resources can be catalyzed as well, in many—in many African countries. Transparency. And many of the common framework countries are in Africa as well. So sort of this is—and they’re under some of the biggest climate challenges. So it’s really—I think it’s very important that this meeting was held on the African continent. And Morocco has really, from what I’ve heard—we’re not there—but has really delivered so far on providing a great platform for this annual meeting.  GOODMAN: OK. Unless—it seems, again, I’m going offer one more chance and challenge to the reporters interested in these issues to feel free to ask a question. If not, I’m going to wrap in a minute. If either of you, Ben or Heidi, think we haven’t covered something that we should have, let me know. I can, while you’re thinking about that, oh, I think I should say also that corporate members are on this call, and you’re also welcome to ask questions as well, of course. There will be a video and transcript of this conversation posted on And you’ll find other resources available there on these related topics and specific topics that we talked about, and others. So feel free to go there.  Any final benedictions, Ben or Heidi, here? Again, this is going to be a semiannual conversation at least, because this is going to—the spring meetings will be held sometime in probably April of next year in Washington. We’re back, it seems, to the real world and people meeting in person. So one would expect a meeting here in D.C. in April of 2024.  And with that, if no other questions, I’m just going to wrap us up by saying, again, this is on the record. Video is going to be up there. Thank you to Ben and Heidi for your time, your insights, and for this conversation. Thanks to participants for listening. Thanks to the media and members who participated. And we will wrap up there. Thank you very much.  CREBO-REDIKER: Thanks  (END) 
  • International Finance
    Academic Webinar: International Financial Architecture
    Tamar Gutner, associate professor of international affairs at American University’s School of International Service, leads the conversation on the international financial architecture. FASKIANOS: Thank you. Welcome to today’s discussion of the Fall 2023 CFR Academic Webinar Series. I’m Irina Faskianos, vice president of the National Program and Outreach at CFR. Thank you for joining us. Today’s discussion is on the record and the video and transcript will be available on our website, if you would like to share them with your colleagues or classmates. As always, CFR takes no institutional positions on matters of policy. We are delighted to have Tamar Gutner with us to discuss the international financial architecture. Dr. Gutner is an associate professor at American University’s School of International Service, and expert on the performance of international organizations and their roles in global governance. In 2019, she held a CFR Fellowship for Tenured International Relations Scholars at the International Monetary Fund’s Independent Evaluation Office. She is the author of International Organizations in World Politics, published by CQ Press; and Banking on the Environment: Multilateral Development Banks and Their Environmental Performance in Central and Eastern Europe, published by MIT Press. And she recently completed a book manuscript on the birth and design of the Asian Infrastructure Investment Bank and its role in the landscape of development banks. So, Dr. Gutner, thank you very much for being with us today. I thought we could begin by having you outline for us the various change-related proposals and activities facing the World Bank, other multilateral development banks, and the International Monetary Fund. Just a small question, but—(laughter)—over to you. GUTNER: Thank you. Thank you, Irina, for introducing me, and thank you for having me as part of this seminar. I think these seminars are just a fantastic way for scholars, professors, students, and others to engage with these important issues, and I’m really excited to see so many people from around the world and professors and students and I see some colleagues in the audience. So I’m really looking forward to engaging with all of you. Right, so this is a critical time for the IMF and the World Bank and other development banks because their importance has been heightened by the need for them to respond to the various crises and challenges that we’re facing now. Many of these, as you know, are quite difficult to solve, like climate change. And the world is also dealing with the ongoing economic and social and health repercussions from the pandemic, the repercussions of Russia’s invasion of Ukraine including food insecurity. And we’re also living in a time when a lot more countries are at high risk of debt distress, and it’s a time when it’s becoming clear that progress toward achieving the Sustainable Development Goals are stalling. We also have major geopolitical tensions, which is an issue as well. So the IMF and the World Bank are leading international organizations in this scenario today. The IMF has been called the center of the global financial safety net. And the World Bank, meanwhile, is the leading multilateral source of climate finance, and is also playing a huge role in responding to various development challenges that impact its borrowing countries. And also, the regional development banks are addressing these issues as well. So for people who support multilateralism, there’s widespread agreement that no one state or actor can solve any of these cross-border issues on their own. And that means we’re living in a time when cooperation and multilateral action is absolutely essential, and these people agree we need more to be done to address these issues. But we’re also living in a time when many states have inward-looking politics, where there’s rising nationalism and populism. And this has produced people and leaders who either don’t see the value of international organizations (IOs) like the World Bank and IMF or they see them as contrary to national interests. The IOs themselves—the international organizations themselves—also struggle with relevance sometimes and mixed performance sometimes. And the IMF and World Bank constantly face criticism. They’re always being criticized. But I think one important thing to remember is that there’s no consensus among the critics. There are always people who want them to do more. There are people who want them to be abolished. So when you’re exploring the kind of critiques of these organizations it’s important to keep that in mind, just they’re coming from different actors and they have different thoughts. And, meanwhile, these institutions themselves, they have—it’s tricky for them because they have a tough job. They have to be responsive to their member-state shareholders, who don’t always agree with each other. They have to try to be responsive to other stakeholders, for example civil society actors; they don’t always agree with each other or with their member states. And so these institutions are constantly being pulled in different directions and they have to navigate that. To their credit, they do try to adapt and adjust, not always effectively. And there’s also variation in what they’ve done well and haven’t done well. But it’s precisely at this time today with these international crises that the Bank and the Fund and the other MDBs—multilateral development banks—have to try to do better. And what I want to do is offer you a brief overview of some of their efforts to do so and some of the challenges that face these efforts. So I’ll begin with the World Bank, which is in the midst of a process to figure out how to update its mission, its vision, its strategy, and its operating model. And this is a process that has been driven by shareholders, including the G20 members, and lots of other consultations. Last fall—well, first of all, I want to say there are a number of proposals on the table on how to reform the World Bank and other MDBs, and they have in common calling for these institutions to do a lot more to address climate change and other global public goods. And some of them call for more effort to better engage with private capital and to rethink how these institutions, which are in part banking institutions, how they can maximize the impact of their capital. So last fall the World Bank embarked on what’s been called an evolution roadmap to think through ideas for what should be done. This came out late last year amid calls for the Bank to be bigger and better. And this initiative was launched by U.S. Treasury Secretary Janet Yellen a year ago, and she led an effort with other non-borrowing and borrowing countries to call for the whole multilateral development bank system to evolve. As she put it, the world has changed and we need these vital institutions to change along with it. So the idea underlying all of these proposals is for MDBs to be more innovative and efficient. India made MDB evolution a priority in its presidency of the G20 this year, and there have been different expert panels that have also called for radically reformed and strengthened multilateral development banks. So what’s interesting for this audience is this evolution roadmap process will eventually turn into the World Bank’s strategy, its corporate strategy, and the latest version of it will be discussed next week at the IMF-World Bank annual meetings in Marrakesh. So if you’re interested in following that, keep your eyes on the news. And the latest version is seeking approval for measures that will allow the World Bank to boost its lending by $100 billion. So this—the document circulating now for the development—the Joint Ministerial Committee of the World Bank and IMF—and we’ll see what happens with it. And I’m happy to talk more about the document itself in the Q&A. These efforts to reform the World Bank are also impacting other regional development banks. So, for example, the Asian Development Bank recently announced it, too, will lend an additional $100 billion over the next ten years by relaxing some of its risk rules for its banking, how it manages its assets, without jeopardizing its triple-A credit rating. The IMF also has been trying to change and adapt in recent years. It’s not directly part of this evolution framework that’s focusing on MDBs, but the IMF has really turned attention to climate change and also to gender and inequality. And it’s essentially pushing forward a kind of a slow change in thinking where economists, and finance ministers, and central bank leaders have realized that these issues are essential to macroeconomic stability. So climate change has become a more visible focus of the IMF’s work, its work in surveillance, its capacity development activities, and its general work with countries. Its first strategy for mainstreaming gender was adopted in July 2022. And, like the World Bank, it has also created a number of mechanisms to respond to the pandemic. So it has a new resilience and sustainability trust. And the goal of it is to help low-income member states to address climate change and issues like pandemic preparedness. And it also has a new food shock window to offer emergency financing for countries facing food insecurity as a result of everything going on today. So this is—it’s interesting to watch both of these institutions. The IMF typically has a harder time changing because it’s a more rigid, set in its ways organization. But it, too—it’s not your grandmother’s IMF anymore. But all of these efforts are going to face their own sets of challenges. And I want to briefly highlight a few of them before we have our Q&A. So in the World Bank’s roadmap, which is also being called a new playbook, the question is: Is it a zero-sum game to balance more focus on global public goods like climate change with individual countries’ own development priorities? And there are many people who say, no problem. Kristalina Georgieva, the managing director of the IMF, when talking about this balancing issue, she said: Well, we can chew gum and walk at the same time. But these goals may have areas of overlap, where a country’s own development issues do coincide with these global public goods, but there may be areas where they do not. And that’s something that has to be worked out. There’s also some criticism in civil society and other actors about asking the multilateral banks to do much more to engage with the private sector. First of all, this idea has been around for a while, this idea of turning billions and trillions, for example, was part of the 2015 UN Financing for Development Conference. And it hasn’t really come through. So it’s a difficult issue to do. There’s going to be more work on it. But some organizations actually are concerned about potential negative effects of prioritizing incentives for private finance to provide co-financing to development efforts, because private sector goals are not always the same as public goals, right? So there’s some areas of tension. And finally, I just want to flag that all of these organizations are calling for more collaboration. Collaboration is almost the magic wand that will help all these efforts to work out better. And, in fact, if you look at the IMF’s new annual report, which was just published, it lists on its front page “committed to collaboration.” But, in fact, it’s not that easy for these organizations to collaborate. And I’m happy to break that down a little bit more. And so this great emphasis on something that can be difficult will be something that these organizations have to grapple with. I’m happy to talk about more of the issues in our Q&A, but I think I should stop here and open it up to questions or comments. FASKIANOS: Thank you, Tammi. That was fantastic. So we’re going to go to all of you for your questions. (Gives queuing instructions.) OK, so I’m going to take the first question from Mojúbàolú Olúfúnké Okome. Q: Thank you. Mojúbàolú Olúfúnké Okome. I’m a professor of political science at Brooklyn College. And I’m just wondering about this financial architecture that is much criticized, as you said. And I’m wondering the extent to which the criticism informs new decisions that are taken. So the criticisms about people who say the organization should be abolished is coming from the Global South, where there’s been feeling since the 1970s that these organizations are not sufficiently sympathetic or understanding of the challenges faced by the countries that had unsustainable debt, and are still in a deeper state of unsustainable debt today. So how is the global architecture on these—in these organizations dealing with these challenges? I heard for the first time, like, in the last five years—Lagarde, I think it was—that said, oh, we made mistakes in some of the advice that we were giving. So who pays for those mistakes? People’s lives are damaged, economies are wrecked. And you know, so what are the—what’s the good of these changes, really? GUTNER: Yeah, thank you so much for that question, because that’s a really good reflection on some of the harsh criticism that these institutions face. And I also would not be someone who says they do everything right, because they don’t. But it has been interesting to watch some of the ways that they’ve evolved. So, for example, they do interact much more with civil society than they used to. I mean, it used to be in the old days when the IMF and World Bank had their annual meetings, civil society actors would protest outside on the street in Washington, DC. And I would tell my students, feel free to go down there but please maybe try not to get arrested, you know? So there were—there were very large protests. Now, when they have the annual meeting, civil society actors are in—are part of it. They’re engaged in seminars. They’re engaged in discussion. The institutions have strengthened some of their accountability measures, although I could argue some of them are also still weak. But there have been changes. So for example, the IMF now addresses and thinks about social protection, which it didn’t used to do, and social safety nets, which it didn’t used to do in the past. So you can argue that these changes aren’t enough, and they’re too late, and it’s still harmful. But I think there is evidence that they do try to evolve and adapt, maybe not perfectly. And also, it’s really difficult to change a huge institution. It’s like turning a large ship. You know, it doesn’t happen quickly. But the narrative today is different from the past. I mean, there is—there is more focus on climate change, for example. Which you can argue some countries, it’s not really their priority. But even that’s changing. More countries, more developing countries, are realizing that issues of climate change are related to them, whether it’s through natural disasters, you know, hurricanes, floods, mud—you know, all of this. So I think it’s—I think this criticism is still out there. And it exists. The institutions are imperfect. But they do—they do slowly try to adjust and adapt. And if you dig into it, if you go into detail, you’ll find that they do a better job in some issues than others, in some countries than others, in some periods of time than others. So as a scholar I would argue that you—it’s hard to make a blanket statement about them without kind of unpacking, you know, specific cases and over time. FASKIANOS: Thank you. I’m going to take the next written question from Jon-Paul Maddaloni, a military professor at the U.S. Naval War College: For the World Bank, what is the definition of creditworthy? Is this a debt-to-GDP ratio? Is there a standard here that may be part of the developing world grievance against the World Bank? GUTNER: So there are complex ways of assessing that. But basically, one of the major ones is to decide if a country is eligible for IBRD loans, which are International Bank for Reconstruction and Development, the main part of the World Bank, which are loans that have to be repaid. And if a country is relatively less creditworthy or poor countries can access grants, or no-interest loans, or concessional funding from the World Bank’s arm that’s called IDA, the International Development Association—or, Agency. (Laughs.) I just—I just call it IDA. So if you’re—if you’re able to access IDA funding, you’re relatively less creditworthy. The World Bank also has other facilities to offer—both the bank and also the IMF—capacity development, which is just money given for technical assistance. And those are the different categories for the World Bank. So countries can change category. So if a country becomes more economically stronger, it can graduate from IDA concessional financing. If it becomes weaker, it can access that financing. And there are some countries which can get a blend. In other words, they’re creditworthy enough to be able to take some amount of loans, but not enough so that all of their financing can be a loan form. So these are some of the ways that the World Bank responds to different categories of creditworthiness. FASKIANOS: Fantastic. I’m going to take the next question from Fordham’s International Political Economy and Development Program. They have a raised hand. If you can just say who you are. (Laughter.) Q: Thank you for being with us today. I’m Genevieve, part of the Fordham IPED Program. My question is, what are some specific examples of how a country’s national political landscape and private interests cause these setbacks for cross-sectoral collaboration in these development banking efforts? And how do these large banking institutions work around corruption, for example? GUTNER: I’m sorry. Can you repeat the first part about collaboration—cross-sectoral collaboration? Q: Yeah. What are some specific examples of how a country’s national political landscape and private interests cause setbacks for cross-sectoral collaboration for these development banks? And then we could take corruption as an example. GUTNER: So I’m not 100 percent sure what you mean by the—by the cross-sectoral collaboration. When I’m focusing on collaboration, or when the narrative is focusing on collaboration, it’s really focusing more on collaboration between, for example, the World Bank and IMF. How do they collaborate? And the answer to that is, they haven’t collaborated well for almost eighty years. But that’s not—what I think you’re asking is, what happens between these institutions and the national level? Well, one issue—the issue of corruption has become much more widely discussed in both the World Bank and the IMF. In the past, it was seen as a domestic political issue, which is really outside their articles of agreement. They’re not supposed to get involved in these domestic political issues. But there’s much more awareness today that corruption—for example, in the IMF—corruption impacts a government’s health—the fiscal health, their ability to have money to spend on development. And the same is true for the World Bank. So there’s much more attention on these issues. The institutions still have to navigate carefully so that they don’t look like they’re getting involved in politics, even though they can’t really avoid it. But so corruption is much higher on the priority list. And it can impact a country’s ability to get funding from either institutions. So from the World Bank, and they have—they have lists of companies they won’t work with in procurement, for example, who are barred from engaging in procurement. And it’s part of discussions. It shows up in the partnership—the framework documents that both countries produce for individual countries. So a kind of a—this is a long way to say, it’s on the radar and it matters. But a lot of the collaboration issues are related to how the institutions work with each other. But also in country, I should add, that in some countries the donors collaborate on the ground. So they meet together and they try to make sure they’re not overlapping. There’s—it doesn’t always work very well. You know, in some cases it works better than others. But for the institutions to collaborate more with each other, they have faced many challenges in doing that. FASKIANOS: Thank you. I’m going to take the next question from Joshua McKeown, associate provost and director of the international education at State University of New York at Oswego: For context, how much lending does the World Bank do in comparison with regional development banks? GUTNER: Well, I guess it depends. I don’t have all that data at my fingertips, but the World Bank in the last—in—let’s see, I do have the World Bank data at my fingertips. Let me just pull it up. See where I had it. The World Bank in its current annual report, the IBRD committed $38 and a half billion in 2023. IDA committed $34 billion. The regional banks are much smaller, so the World Bank tends to be the largest. But there’s also a lot of variation across the regional banks as well. Now it’s important to say that they will often cofinance projects with each other. So the regional banks will engage with the World Bank, and they’ll have shared projects, and they’ll work together. There are times where they also will compete with each other on occasion. They might both be interested in funding an airport—building an airport somewhere. And one of them may offer more attractive terms than the other. But the competition is not kind of a serious problem, because basically wherever you look in the world, there’s almost an infinite demand for infrastructure finance. You know, show me a city that doesn’t need a new metro, or the roads repaired, right? So there’s a lot of demand out there for these banks to be able to do what they do. And but that has to be tempered with the, on the other side, how much debt can an individual country take on? And that’s where we’re seeing more serious problems today. FASKIANOS: Thank you. I’m going to take the next question from Samia Abdulle from Professor Fazal’s class. And she is at the University of Minnesota: How has COVID-19 renewed the debate about the World Bank’s role in international development? GUTNER: That’s a great question, because when it comes to crisis, member states turn to these institutions right away. And this is a little separate from your question, but before the global financial crisis, for example, the IMF and the World Bank had seen their demand for their services drop dramatically. There were questions about the legitimacy of the IMF. Then the global financial crisis hit and, boom, they were kind of the go-to organizations to help respond to these issues. So the World Bank and the IMF both responded pretty rapidly to the pandemic. And they each came up with new facilities, they got money out the door quickly, they relaxed some of their conditions. So they both had a kind of a robust response. Now, there are people who are saying, well, it was not enough. It should have been more. But, you know, they did a lot. And in an emergency situation, also, you have to remember, they all had to work at home as well. So everybody was working at home. Nobody could travel, but yet they got a lot of money out the door quickly, in different kinds of ways. And I think what we’re going to have to revisit down the road is, did any of that money disappear? You know, where—was there accountability for all this money, because it was moved out the door so quickly. And the head of the IMF, Kristalina Georgieva, would say: Just save your receipts. (Laughs.) Just save your receipts. But that’s going to be something to see, what happened with this money, where did it actually go, how did accountability work? But the World Bank alone got $30 billion—it dispersed $30 billion in fifteen months at the beginning of the pandemic in emergency support. So they really did step up. And whether it was enough or not is a matter of opinion. But they moved—they did move quickly. And I should just add, since you asked about—I just want to add one thing. The World Bank was involved in getting people access to vaccines, helping weak health infrastructures in countries, and all kinds of issues related to the pandemic. FASKIANOS: Fantastic. So I’m going to take the next written question from Yiagadeesen Samy, who’s the director of the School of International Affairs at Carleton University in Canada: You already covered the AIIB in your opening remarks, and we will be circulating this transcript in the video later, but let’s look at the second part of the question. Can you comment a little bit on whether the proposed changes to MDBs are a reaction to China’s growing influence? And if so, what your views are about the changing geopolitical economic dynamics? GUTNER: It’s so great people are asking these simple questions. (Laughs.) FASKIANOS: I know! GUTNER: Yes. FASKIANOS: Keeping you on your toes! (Laughs.) GUTNER: Yes. So let me preface by saying this: China has different strategies in development banking. On one side, you have the AIIB, for example. On the other side, the Belt and Road Initiative. The AIIB is not—in my research, it’s cut from the same cloth as other development banks. It’s not a threat. It’s a part of the landscape of development banks. It’s part of the community. It was designed by an international group of experts. In fact, the person who wrote the AIIB’s articles of agreement was an American. And the person who designed the AIIB’s environmental and social framework was an American. So it was a—it was a real international effort. And in fact, the World Bank helped the AIIB get set up. So the World Bank volunteered staff and gave the AIIB advice on things like vacation policy and office furniture. This is the Beijing office of the World Bank. And the World Bank even ran the AIIB treasury at the beginning, and it cofinanced projects. So the AIIB is cut from the same cloth as development banks. Now, it does have some differences. It’s has—it’s much smaller. It has a staff under four hundred. The World Bank is ten thousand, for example. And so there are some people who think it might have spurred the World Bank to pay more attention to doing more on infrastructure, which it had moved away from a little bit because that’s the AIIB’s focus. But the Belt and Road is something different. It’s a bilateral initiative. It’s an umbrella for Chinese financial institutions to lend money for infrastructure. It’s not actually an organization. It’s just an umbrella term. And there are differences, because the banks lending under the Belt and Road, Chinese institutions, they don’t follow global norms on environmental and social framework, on safeguards. They’re not transparent. We can’t—we don’t know how the loan is structured. They don’t report the lending numbers to the Paris Club, for example. So there’s a real difference between China’s strategy in the AIIB and China’s strategy in the Belt and Road, which reflects the different natures. There’s not one Chinese strategy. So I think, in a way, the existing development banks help the AIIB more, and their staff help the AIIB more. The Belt and Road is a separate thing. But what I think is going to be interesting is to see if the borders, the boundaries between what is done following global norms, and rules, and procedures, if there’s any kind of crossover with what’s inside those borders and what’s outside those borders. So for example, the AIIB is hosting a facility to help countries better design infrastructure projects that might be undertaken under Belt and Road. And so we just have to keep an eye on that. But it’s not—it’s not a bleak or black and white picture, the way some people describe it. FASKIANOS: Fantastic. A good follow up question from Steven Shinkel, who’s the military professor of national security affairs at U.S. Naval War College: Can you compare the relative use of concessional loans between the World Bank and China? What about loan forgiveness, especially in regions such as Africa and South America? GUTNER: Right. So most of the Chinese lending under Belt and Road is not concessional. Most of it is not concessional. And often interest rates are higher than a comparative loan, even from the IBRD, even non-concessional lending. So they will often charge higher interest rates, but they will have less conditionality. So a country trying to decide who to take a loan from will have to weigh that. Do we want a lower interest rate loan from the World Bank that might have more policy conditionality, we might have to adjust our policy, we might have to think about environmental impacts more? Or do we want a slightly more expensive loan from a Chinese lending institution, but it doesn’t have any strings attached? So that’s kind of the part of the decision-making that borrowers have to go through. On debt—the second part was on, I’m sorry, the question disappeared. On debt? FASKIANOS: Oh, sorry. Yes, the second question is: What about loan forgiveness, especially in regions such as Africa and South America? GUTNER: Well, that’s something that’s being widely discussed right now, because Chinese institutions haven’t been as comfortable about that, or as used to that. And they’re—you know, they’re being pushed by other institutions. Hey, you have to take a haircut too. We all have to—we all have to do that. There is a little bit of that going on. But it’s something—I mean, if you read the article suggested in the email about this talk by Deborah Brautigam, she really unpacks that in great detail. And she makes an argument that there’s some kind of learning and give and take that’s happening and we need to see more of it. FASKIANOS: Fantastic. Next question from Lindsey McCormack, who’s a graduate student at CUNY Baruch College: There’s a lot of activity in the U.S. and Europe with new disclosure standards on climate and social impacts of corporations. How do the multilateral development banks relate to this activity? Are they seeing more pressure to discuss—oh, sorry—disclose climate and social impacts of their lending? GUTNER: Yes. (Laughs.) Yes. Now, they already do a lot. They already have environmental and social safeguards. And they’ve all moved away from funding oil and gas, or mostly oil and some gas. So they’re moving away from that. And they’re all working together, actually—I mean, I think it’s an important example of networking—of the network of MDBs—that they’re all moving toward meeting—complying with the Paris Agreement and showing how they’re doing that. Now, some of this is how they measure things, and how they label things, and how they account for things. So there’s still some debate on whether they’re doing enough. But there’s, for sure, pressure from NGOs and others. And the banks are moving in that direction. And they’re—they’re proudly touting how their projects comply. A high percentage of their projects are complying with the Paris Agreement. But there’s still some interesting criticism coming out. So, for example, there was a recent report by a German NGO that said the World Bank’s private sector lending arm, the IFC—that the IFC was making loans for trade support where that money might go into oil and gas. But you can’t tell, right? So they were calling for more transparency on how the IMF is—how the IFC is doing trade credits. So that’s something that’s very recent. You can look that up and read more about it. FASKIANOS: Just to follow on, how are the multilateral development banks structured? And how effective do you think they are? GUTNER: Structured in terms of what? I mean, I can talk generally in case—so they— FASKIANOS: Yeah, I think corporate structure. GUTNER: So they have—they all have board of governors, which are all the top relevant officials of their member states, typically the finance minister or the central bank head. And they meet once or twice a year. And they make the big decisions. So one thing that’s important to realize is a lot of these countries are members of a lot of development bank—there’s a lot of overlap in membership. And that’s also a way to cross-fertilize ideas, and policies, and things like that. They all have boards of directors, which are more engaged with the day-to-day business. And the—voting is based on your shareholding in the development bank. And that is based broadly on your economic strength. So the economically stronger companies have—stronger countries have a larger share and more voting power. And then you have the presidents of these organizations that have an important leadership role. And then you have the staff. So that’s basically the structure of these development banks. And meeting next week are the board of governors and the directors in Marrakech for the World Bank and IMF. And you can see how they engage with staff and how they help set the strategic tone for the institutions. FASKIANOS: Fantastic. And I just want to remind everybody to raise your hand if you want to ask a question. Everybody’s a little bit shy today, or else Tammi’s been so thorough that you have no questions. (Laughter.) But I have more questions. But first, I’m going to go to Don Habibi, who is a professor at the University of North Carolina Wilmington: With yesterday’s stock market plunge and political instability in the U.S., how much concern should we have over the multitrillion-dollar national debt? GUTNER: So that’s not an issue that directly impacts the international financial institutions, the IMF, and the World Bank, right now. I mean, the U.S. is the largest shareholder of both, and they both—or, the World Bank has a AAA credit rating. So it’s not really—we might be concerned over national debt, but so far it’s not having a big impact on the dollar. So far, it’s not having a big impact on investment. So there’s always kind of some concern, but it’s not—it’s not translating into anything that’s making people nervous about how these organizations operate. But, you know, one place to look for an answer, I’ll tell you this, is when the IMF does surveillance, it does—which are its reports on the economic health of individual member states. It does these surveillance reports even on the rich countries. It does them for everyone. So I would suggest you look for the latest article for surveillance report that the IMF has done on the United States, and see what it has to say about concerns about debt. FASKIANOS: Fantastic. You recently completed a book manuscript on the Asian Infrastructure Investment Bank. Some policymakers and scholars have argued it is a threat to the World Bank. Can you talk about if you agree with that or disagree? GUTNER: Oh, right. So I answered a little bit of that earlier, actually, which is: I don’t think it’s a threat because I think it’s cut from the same cloth as these other development banks in terms of it has similar policies, it has similar governance rules. The World Bank—it’s signed MOUs, memoranda of understanding, with all these other development banks. It cooperates with them. It cofinances projects with them. So I think the narrative of the AIIB being a threat is not correct. Could something change in the future? Who knows. But there has been a recent scandal at the AIIB. And we don’t know how that will yet be resolved, where this past summer the Canadian director of communications resigned dramatically, suddenly, arguing that Communist Party committees were somehow involved in the work of the bank. And we—so, Canada froze its membership. So that’s a bit of a scandal and a crisis at the AIIB. And Canada is doing its own report on what happened. So I kind of think we have to see what comes out of that report. If Canada decided to leave the AIIB, would it impact any other members? Too early to say. But so far, there’s nothing directly threatening about its work. It’s walked and talked and behaved like other development banks. It does have some differences. It has a nonresident board, which was seen as a cost-saving measure. You know, why have all these people sit around and cost a lot of money? But there are some civil society actors who think that that could produce less accountability. If the board is not there, you know, the bank has more kind of autonomy to do—more independence. So there are some differences. But so far, it’s been just another member of the multilateral development bank system. FASKIANOS: Thank you. All right. We have more hands raised, which I’m very excited about. Tanisha Fazal, who is the Weinstein chair of international studies at University of Richmond: You mentioned the difficulties of collaboration between IMF and the World Bank. Can you please elaborate on what you see as the primary obstacles to collaboration between MDBs? GUTNER: Yes. I’m happy to talk about that. So that was the topic of my year—my Council on Foreign Relations fellowship at the International Monetary Fund’s Independent Evaluation Office. And we were evaluating Bank-Fund collaboration. And I was part of the overall evaluation, which you can find online. And I also wrote a separate paper on the history of Bank-Fund collaboration. And I found it to be absolutely fascinating, because these two institutions were created together at the Bretton Woods Conference. And they’re called the Bretton Woods twins. They’re literally across the street from each other. There’s an underground passage that connects the two. They interact all the time. They have a joint orchestra. I don’t know if anybody knew that. (Laughs.) They used to share a library. So there’s a lot of—if any two organizations should be able to work closely together, it’s these two, right? This should be your best case, and yet they’ve struggled for their entire existence. And I think one of the obstacles is that over time their issues have overlapped. So an example of that is today, when the IMF is doing more on climate change, gender, and inequality, which traditionally is the work of the Bank. So their work has kind of—over time, given the issues facing the world, it’s kind of naturally overlapped. And what I found that was very interesting is in over twenty-five different formal attempts the two institutions produced to collaborate with each other—memos and announcements by the heads of the institutions—for decades, what they meant by collaboration was turf delineation. Collaboration meant you stay out of my territory. (Laughs.) I don’t think of that as collaboration. It’s working together on a common objective, right? So that was what they meant by it, and for many years what they—what the solution was, that the institution that’s not in charge of this issue should yield to the judgment of the other one—the yield to the judgment one. So I think turf overlap has been a problem. But even when they make an effort, often they have different incentives, they have different budget cycles, they have different—you know, it’s just not that easy. And the IMF’s latest strategy for collaboration has been when IMF staff encounter an issue that they don’t have expertise in, they should leverage the expertise of the World Bank and other partners. Well, that, to me, sounds like one-way collaboration, which is an oxymoron, right? That if the IMF needs help, it should call the IMF and get help—I mean, call the World Bank and get help. But for the World Bank, they might be busy. (Laughs.) So those kinds of challenges persist. There have been times where they do create a truly collaborative effort, like the HIPC Initiative, or the FSAPs, or the PRSP—sorry for all the acronyms—but where they—where they have a shared work program and shared guidance and shared expectations. Those have tended to work better than big umbrella exhortations by the leaders saying: Collaborate! You know, do more collaboration. Those have tended to work better, but they also run into individual problems. So really, the upshot is, even though you would expect collaboration to be the easiest and make most sense between these two institutions, in fact, it’s often been a struggle. And some people found, when I mentioned the IMF’s resilience trust, that’s something that would normally have been undertaken by the World Bank. So they have not—they have had challenges collaborating, and those continue. FASKIANOS: Thank you. And I need to correct the record, my apologies. So that question was from Tanisha Fazal, who is an associate professor of political science at the University of Minnesota. So the next question is from Sandra Joireman, who is the Weinstein chair of international studies at University of Richmond. So my apologies. So this this question is from Sandra: Some of the previous efforts to address the environmental impacts of certain projects were ineffective. Do you think new efforts to address the environment and climate challenge change will be better? If so, why? GUTNER: So I’m guessing you’re referring to the World Bank? And, yes, there’s a whole long history of the Bank addressing environmental issues. And it really started in the 1980s, when NGOs identified projects that had gone horribly wrong and caused enormous environmental degradation. Like the Polonoroeste highway in Brazil. It was a famous—infamous example. And the Narmada dam in India. These are infamous examples. But when you look over the years, there have been improvements to what kinds of things the Bank can lend money to, how strong the environmental and social safeguards are. So when I look at the whole history of the World Bank and environment, I basically see it is not a one-way trajectory, and as forward or backward. I see it as more zigzag steps, some forward steps, some backward steps, some forward steps, some backward steps. So overall, because climate change is becoming one—it’s about to become a major part of the Bank’s mission and vision. So before it was shared prosperity and poverty reduction, and now it’s going to—if it’s all approved next week—it will be shared prosperity, poverty reduction, and a livable planet. So climate change is kind of moving the front row and center. And that will make it harder for the Bank to fund projects that can be criticized. It will make it much more important that it follows these solid environmental and social framework rules. So I think it’s a move in the right direction. But as I mentioned earlier, we’re still seeing criticism from NGO about things slipping through the cracks, like trade finance, right? Or another area that’s weak is the World Bank—the IFC and the World Bank will sometimes lend money to financial intermediaries. So it’s like—it’s like lending money to a local bank that then lends it out for something else. And there’s been less oversight about how that money is on lent, and whether that can go for something that’s damaging to climate change or the environment. So they’re moving in the right direction. I think there’s been progress. I think there’s been backward steps and forward steps over the whole arc of the World Bank’s efforts in this area. And I think there’s still going to be some criticism as they address some of these areas where there’s slippage. FASKIANOS: Thank you. I’m going to take the next question, a raised hand from Sheri Fink. So, Sheri, if you can say who you are and accept the unmute prompt. Q: Oh, I’m sorry. I think I pressed the wrong button. I didn’t mean to raise my hand. Sorry about that. FASKIANOS: OK. No problem. All right. I will take the next question from Eric Muddiman, master’s student at Norman Paterson School of International Affairs in Ottawa, Canada: In terms of mobilizing more private capital and development, there has been discussion on MDBs’ role in mitigating risk. Private sector are not allowed to invest in BB/BBB ZIP code investments from a regulatory perspective. Are there concrete proposals advancements in these discussions? GUTNER: Yes. Do I know what they all are? No. It’s kind of a live discussion. And I know, in the new World Bank—the latest version of the evolution roadmap, there’s talk about creating, like, a lab—an innovation lab, or a private sector lab, to try to do more. Some of the banks have hubs in some areas where they—areas in the developing world where they might have better access to private sector actors. And they’re trying to engage with private sector actors in conferences and find ways of discussing project ideas. So that’s not as concrete as you like, perhaps, but there are efforts to think about this. And there was a seminar at the spring meetings with private sector actors who are also saying that they felt they could do more to engage colleagues and find ways to bring the private sector and public sector together. So there are initiatives, seminars, hubs, labs. You know, all of this stuff is kind of lively and happening right now. And I do think it will be interesting to see what, if anything, catches on. Because, as I mentioned earlier, this discussion has been going on even before 2015, but the turning billions into trillions discussion. And it just hasn’t worked out that well, because of these issues like risk, right? Private sector actors may not want to involve in countries where the risk is too great and where countries don’t have capacity, where they have weaker capacity. So there are many challenges in this area. And just a variety of activities and ideas being put forward to try to respond. FASKIANOS: Thank you. Next, a raised hand for Walton Brown. You can accept the unmute. There you go, Walton. Q: So I too—I didn’t intend to hit anything. I’m so sorry. FASKIANOS: OK. That’s OK. GUTNER: You can still ask a question. (Laughter.) FASKIANOS: That’s OK! You can still ask a—exactly, Tammi. We can—we can still—we love hearing from you all. So, all right. Well, we will continue on— Q: And my phone is troubled. FASKIANOS: Phone is troubled. (Laughs.) No problem. That’s just fine. OK, so I’m going to go next to—let’s see, we’ve got several who don’t have affiliations, but let me go to Holley Hansen: A lot of previous questions have focused on the World Bank or IMF operations. But going back to your original remarks, there also been discussion on how internal rules and procedures, such as voting, leave stakeholders out of the decision-making process. What major suggested reforms to internal decision-making do you think are viable? And what are the pros and cons of changing those rules? GUTNER: Well, the voting is part of internal decision-making. So the voting is part of that. And the real issue has been, how can—well, one of the real issues is shouldn’t China have a greater stake? Shouldn’t China have a higher stake? Because China is now the number-three largest stakeholder in the World Bank and the IMF, after the U.S., number one, and Japan, number two. But its stake, at around 6 percent, is really less than it should be if you follow the kind of formula they use to calculate a state’s economic strength. It’s been calculated that really it should be more like 12 percent, right? So part of the discussion is how to give developing countries, and especially China, more weight in governance through the—through the voting share. And that’s an ongoing discussion. Right now, in today’s kind of more tense political—global political environment, it’s hard to imagine the U.S. supporting something like that at this juncture of time, although there have been reports that the managing director of the IMF is open to it. So I think this is going to be one of the issues that is discussed in Marrakesh next week, what to do with these voting shares? But they do adjust them every so often. So China did move up from having a lower ranking to now being number three in the IMF and World Bank. So it does happen over time. Internal decision-making is a whole complicated other kind of issue. And these development banks, you know, they all face internal decision-making challenges. They all face kind of common tensions. So one of them is how you balance authority between the country—people who work in the country and people who work on sectoral issues. So how do you—who should—who should have more decision-making authority, the country level or the sector level? There are decision-making issues and tensions between the public sector lending arms of these development banks and the private sector lending arms, because they have different incentives and different goals. So there have been challenges inside these development banks with kind of internal silos and where power and authority should be held. And it’s hard to come up with what the right answer is. You know, there are pros and cons to giving more power to the country or more power to the sector. And in fact, these banks restructure from time to time. And if you look at kind of the history of the restructuring of some of the major development banks, they sort of move back and forth between where they think authority should be located. So these issue—it’s a whole other can of worms than voting power on the board of directors. But it’s important, because it can affect their performance. It can affect their performance and their ability to function effectively. FASKIANOS: Thank you. I’m going to take the last question. We have several quick questions from Fordham again. Let’s see. There you go. Q: OK, thank you. So in the worst case scenario that the U.S. and China engage in conflict in Taiwan, how would the World Bank respond to the economic shocks of this in geographically vulnerable neighboring countries, such as Vietnam, Laos, and the Philippines? GUTNER: That’s a tough question. Thank you for ending this with a really tough question. We’re not supposed to say I don’t know. (Laughs.) We’re supposed to have—that’s a tough one, because, again, China is number three at the World Bank. So if China—couldn’t—most of the time voting doesn’t happen. Most of the time, it’s consensus. So it’s hard to predict. I mean, you’d have to unpack a lot of different things there. You’d have to unpack what kind of—what would the World Bank normally do? Would it normally—would it affect development lending to neighboring countries? I mean, it’s interesting to look at the case of Russia’s invasion of Ukraine and how—what the response to that has been, because Russia’s a member of all these institutions too. But the development banks mostly froze lending to Russia. Also, the AIIB did, because it had to comply—to comply with these sanctions. So Russia lending has been frozen. And these institutions are all giving money to Ukraine to help Ukraine rebuild. So there is kind of a situation that can be—that can be used to compare, to kind of get ideas about what might happen, right? And even at the AIIB, Russia is number three largest shareholder in the AIIB. It’s China, India, and Russia. And the AIIB immediately froze lending to Russia. So we could—we could kind of play out different scenarios, but there’s a lot of unknowns in that case. And I do think looking at the response of MDBs to Russia’s invasion of Ukraine could provide some useful lessons. FASKIANOS: Tammi, we are at the end of our time. And I apologize that we couldn’t get to all the questions. I wonder if you could just take a minute. You were awarded a CFR Fellowship for Tenured International Relations Scholars, which allowed you to work—be placed in a government office. So if you could just take a minute to talk about that experience and encourage other professors to apply. The deadline’s coming up. It’s the end of October. So it just would be great for you to just give us your— GUTNER: Absolutely, yes. All the professors in the audience, please apply for this, because it’s a special, invaluable experience. When you’re—when you’re studying something, and you have the opportunity to be an insider for a year, I can’t even tell you how much you learn. I learned being—and it’s a two-way street. They benefit from the expertise of the scholars who are coming in because we bring a different perspective. We bring different analytical and methodological tools. And I just can’t tell you how much I learned that I could never find out as an outsider, including the IMF-World Bank orchestra, or the—(laughs)—yeah, actually, maybe some outsiders know that. But really, to open up the black box of an organization and see firsthand about how things work internally, what the culture’s like, how things get done, what happens in the hallways. I mean, all that stuff, all of those kinds of details really enhanced my scholarship and shaped my research direction, working on these issues of collaboration, for example. So if any of you are considering applying, please feel free to get in touch with me if you have any questions about the fellowship. I’d be happy to discuss it with you. FASKIANOS: Thank you. Thank you for that, and for your amazing insights into these issues. And to all of you for your great questions. You can follow Dr. Gutner on X, the app formerly known as Twitter, at @TGutner. And for the students on this call, CFR has paid internships. So to learn more about the internships you can go to—and also the fellowships—you can go to Follow us at @CFR_Academic, and visit,, and for research and analysis on global issues. And the next Academic Webinar will take place on Wednesday, October 11, at 1:00 p.m. (EDT). Landry Signé, senior fellow at the Brookings Institution, will talk about Africa on the global stage. So, again, thank you to Tamar Gutner. And to all of you, have a great rest of your day. GUTNER: Thanks for having me. And thanks to everyone for attending. (END)
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