The IMF and the WB face meetings with optimism regarding the resilience of the economy

The International Monetary Fund (IMF) and the World Bank (B.M.) spring meetings begin this April 15 with the optimism that the economy will rise in 2024 than expected, despite the complex global situation derived from the wars in Ukraine and Gaza and the increasing geopolitical polarization.

If just a year ago the managing director of the IMF, Kristalina Georgievapessimistically outlined the times to come in the traditional ‘curtain raiser’ – the speech he delivers a few days before the event and which marks the symbolic start of the economic event -, this week the message was different.

“Resilience” and “relief” were two terms that he spoke last Thursday at the Atlantic Council think tank in this year’s curtain raiser, in which he confirmed that four years after the pandemic the “soft landing” was achieved. and allay any fear of a recession.

“In view of the data, it is inevitable to breathe a sigh of relief. “We have avoided a global recession and a period of stagflation, as some had predicted,” pointed out the Bulgarian, who was re-elected to her position on Friday.

This coming Tuesday the Bretton Woods Institution will offer an update on global global growth figures (its WEO report) which, according to Georgieva, will be slightly “stronger” than expected due to robust activity in the United States. United States and in several emerging economies.

Meetings

The Spring Meetings of the Boards of Governors of the International Monetary Fund and the World Bank Group They bring together central bankers, finance and development ministers, legislators, private sector executives, representatives of civil society organizations and academics.

Over the course of a week, various forums and meetings will discuss issues of global concern, including the global economic outlook, poverty eradication, economic development and aid effectiveness.

This year’s meetings come at a complex geopolitical moment, with two wars (Ukraine and Gaza), the Iranian offensive on Israel in retaliation for the attack in Damascus against its consulate and slight frictions between USA and China, which have not had as many negative economic consequences as initially feared.

They also come at a time when central banks are beginning to study the possibility of lowering interest rates, after the increases produced in recent years to control high inflation due to the pandemic and the conflict of Ukraine.

When to cut rates will be one of the topics of discussion because, as Georgieva mentioned, “the authorities must resist calls for early cuts.”

The managing director will thus defend the Fund’s position that “premature easing could generate new inflationary surprises that could even require a new episode of monetary adjustment.”

Reducing excessive public debt and refinancing that of low-income countries will be another of the main topics to be discussed, as confirmed on Friday by the president of the World Bank (WB), Ajay Banga, in a talk with the media.

New strategies

This coming week there will be a new meeting of the Sovereign Debt Roundtable, a group created in February 2023 to analyze debt restructuring processes and practices and generate a common understanding among key stakeholders in debt sustainability.

The excessive debt of poor countries, aggravated after the pandemic and in the face of high interest rates, is “a problem and no one can rule out its severity,” said the president of the development bank.

Banga will also insist these days on one of his main messages since he arrived at the World Bank last year, the need to invest more in green projects. His goal: “That 45% (compared to the current 35%) of our financing be dedicated to climate next year.”

It will also seek to work to streamline bureaucratic processes and ensure that the average project approval time goes from the current 19 months to 16 this year and 13 next year.