IMF, World Bank pledge to help with Africa’s woes
MARRAKECH, Morocco – In the shadow of a deadly earthquake in Morocco that caused nearly $12 billion in damage, the world’s most powerful economic policymakers said they would focus on Africa as they work to grow and stabilizing the global economy during times of war, inequality and climate change.
The International Monetary Fund and World Bank are holding their annual meetings in Africa for the first time in 50 years as they face a growing chorus of criticism that poorer nations are underrepresented at the two institutions. Both have recently said they plan to give Africa additional seats on their executive boards. The conference theme was clear Monday during the gathering in Marrakech.
“We’re here, Africa,” IMF Managing Director Kristalina Georgieva said on a panel with African entrepreneurs.
Often lenders of last resort, the IMF and the World Bank use billions in loans and assistance to buoy struggling economies and encourage countries operating in deficit to implement reforms to promote stability and growth.
But critics – including officials from throughout Africa – have said policies that deny economies access to credit and loans in the absence of balanced budgets often require governments to make impossible choices, including tax reform or making cuts to subsidies for food or energy.
Though the policies often intend to prevent countries from defaulting, keeping up with high-interest loans in Africa means less money for critical needs, youth and infrastructure, said Nadia Fettah, Morocco’s economy and finance minister.
“When we’re having the conversation about how much financial resources are available, that we need to choose between food security and debt or climate finance and economic outside investment – we need both,” she said. “Emerging countries need all of this, and the future of growth in the world needs growth in Africa.”
From Egypt to Ghana, those choices have sparked opposition in recent months. And for years, they have formed the basis of criticisms that the institutions sideline the neediest nations from their governance and decision-making process.
Those criticisms came to a head during the pandemic, when wealthy countries pumped billions into keeping their economies afloat while poorer ones took on more debt.
“It’s a time of multiple crises, particularly for Arab and African countries who’ve been hit by various exogenous shocks not of their making,” said Iskander Erzini Vernoit, director of the Morocco-based Imal Initiative for Climate and Development. “There’s this massive financing gap on the order of trillions for developing countries and also the key question of how affordable the financing can be.”
Those shocks include rising energy and food costs spurred by the war in Ukraine. The challenges are particularly pronounced in Africa, where many countries spend more on debt than health care and education combined.
Africa is also among the places most vulnerable to climate change, with critics calling on the World Bank and IMF to increasingly factor climate resiliency into their decision-making.