GlobalThe IMF and the WB commit to collaborating on climate change, debt...

The IMF and the WB commit to collaborating on climate change, debt and digital transition

Washington, Sep 7 (EFE).- The International Monetary Fund (IMF) and the World Bank (WB) issued a joint statement this Thursday in which they commit to increasing their collaboration in three key areas: climate change, debt and the digital transition.

“The world faces significant economic challenges, the existential threat of climate change, as well as a digital transition” in a context with “more frequent shocks, high levels of debt” and “growing geopolitical tensions,” the managing director of the IMF, Kristalina Georgieva, and the president of the World Bank, Ajay Banga.

In this context, it is “critical” to have “well-designed” and “properly sequenced” policies to help accelerate growth, ease political conflict, and support green and digital transitions.

“The Bretton Woods institutions have a critical role to play in helping member countries address challenges and seize opportunities, working closely together,” they said.

As both institutions have noted in their macroeconomic forecasts, global economic growth has slowed and the medium-term outlook is at its weakest in more than three decades.

The world economy will grow by 3% this year, according to the latest economic outlook report published by the IMF in July, which warns of global risks that could lower the figure, such as persistent inflation, future vulnerabilities in the financial system or that China grows less than expected.

The IMF also estimates that difficult years will come for the global economy, which will grow at around 3% over the next five years, the lowest medium-term growth forecast since 1990, and well below the average of 3.8% for the last two decades.

For its part, in the latest global outlook report published in June, the World Bank placed its global growth estimate for 2023 at 2.1%.

Added to all this is the world facing “geoeconomic fragmentation, extreme natural disasters exacerbated by climate change, and rising levels of public debt.”

Thus, since the challenges “are too great” for individual actors to face, “international financial institutions, national governments, philanthropic foundations and the private sector must work together,” Georgieva and Banga argued.

“Today we need to further enhance our collaboration, in particular regarding climate change, renewed high debt vulnerabilities and the digital transition,” adds the statement, which offers some outlines of the collaboration.

On climate change issues, both institutions will hold periodic meetings of the new Bank-Fund Climate Advisory Group to discuss commitments at the global and national levels.

On debt issues, both institutions committed to working to help prevent further buildup of debt vulnerabilities and will seek to improve the Joint Low-Income Countries Debt Sustainability Framework to better respond to current challenges.

And on digital transition, the two organizations committed to intensifying joint work to help countries increase the effectiveness of government revenue collection and expenditure systems.

This commitment, which takes place three months after Banga assumed his position as the new president of the World Bank, comes after the institution signed a similar agreement with the Inter-American Development Bank (IDB) on the 31st.

The memorandum of understanding was signed at the IDB headquarters in Washington DC and the signing was attended by the president of the IDB, Ilan Goldfajn, and Banga, who pledged to work in the fight against deforestation in the Amazon, strengthening the Caribbean in the face of disasters natural resources and the reduction of the digital divide in Latin America. EFE


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