IMF and WB begin their meetings in the shadow of escalating tensions in the Middle East

Ministers and global economic authorities meet in Washington this Monday to participate in the spring meetings of the International Monetary Fund (IMF) and the world Bank (WB), in a time of optimism about the resilience of the economy, but under the shadow of the escalation of tensions in the Middle East.

This is the first major international event after Iran launched more than 300 drones and missiles against Israel last Saturday, in response to the bombing of its consulate in Damascus, where seven members of the Revolutionary Guard died.

Some events that will inevitably creep into the various forums and meetings in Washington, in which central bank governors, ministers of finance and development, legislators, private sector executives, representatives of civil society organizations and academics will participate.

In parallel with the events of the Bretton Woods institutions, there are scheduled to be meetings of the economic ministers of the G20 and also the G24, a group that brings together developing countries, including Iran.

Over the course of a week, issues of global interest will be debated such as the current economic situation, the future drop in interest rates, the refinancing of the debt of poor countries, the need to invest in green projects, the risks of geopolitical fragmentation or the increasing gap between poor and rich countries.

This is attested to by a report published this Monday by the World Bank: Despite their high potential to promote global prosperity, half of the world’s 75 most vulnerable countries face a growing income gap with the richest economies.

The report ‘The Great Reversal: Outlook, Risks and Policies in International Development Association Countries’ offers the first comprehensive look at the opportunities and risks facing the 75 countries eligible to receive grants and zero- or low-interest loans from the International Development Association. World Bank International Development Association (IDA).

These countries make up a quarter of the human population, 1.9 billion people, who are suffering a “historical setback” since during the 2020-24 period the average per capita income in half of them has grown more slowly than those of the rich economies.

One in three of these countries (mostly in sub-Saharan Africa and Southeast Asia) is poorer today than before the pandemic, while the extreme poverty rate is more than eight times higher than the rest of the world average. . One in four people in IDA borrowing countries lives on less than $2.15 a day.

This year’s meetings come at a complex geopolitical moment, with two wars (Ukraine and Gaza), the aforementioned Iranian offensive on Israel and friction between the United States and China, which have not had as many negative economic consequences as those initially feared.

In fact, the forum starts with optimism since the IMF is expected to improve the economic prospects for global growth. This was announced last week by the managing director of the institution, Kristalina Georgieva, in the ‘curtain raiser’ – the speech she gives a few days before the meetings and which marks the symbolic start of the economic event.

This Tuesday the organization will offer an update of the global global growth figures (its World Economic Prospects report) which, according to Georgievathey will be slightly “stronger” than expected due to robust activity in the United States and several emerging economies.

The meetings 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 in Ukraine.

Reducing the excessive public debt and refinancing that of low-income countries will be one of the main topics that will be discussed these days and for this there will be a new meeting of the round table on sovereign debt, a group created in February 2023 to analyze the debt restructuring processes and practices.