World’s lenders of last resort meet in Morocco

The World Bank and the International Monetary Fund (IMF) are holding their annual meetings in Morocco this week (9-15 October).

It’s the first time they’ve held the annual gathering in Africa since 1973, and the choice of location is timely.

For years, the two Washington-based organisations have faced criticism for being unrepresentative and unresponsive. So they’ve been pushing to:

• 🗳️ Re-balance member representation and vote share 
• 🌱 Reorient their lending to address issues like climate change, and
• 🧵 Mobilise more funding, to more places, with fewer strings.

That last point is key.

IMF and World Bank support often comes with a requirement for the recipient country to reform its economy; the idea here is to address the root causes that led the country to seek financial assistance in the first place.

In practice, this can often mean painful tax hikes or spending cuts. So the IMF and World Bank are pitching ways to stretch their balance sheets through technical tweaks and more support from wealthy members.

But major progress would likely require stretched governments to pony up more cash, and spooked governments to cede more voting power.

And it’s hard to see that happening in Marrakesh this week.

Intrigue’s take: The World Bank has kept its AAA+ credit rating in part because of the rules it attaches to its loans. And that credit rating convinces its shareholders that the Bank is a good place to stash their cash.

So if lenders like the World Bank and the IMF sacrifice stewardship for expediency, it may come back to bite them. But given the scale of the challenges the world faces, they may not have much of a choice.

Also worth noting:

• Both lenders will likely announce a new board seat for Africa this week.
• Morocco was due to host in 2021, but this was twice postponed due to COVID. The meetings were almost postponed a third time due to the earthquake in Morocco that took 3,000 lives last month.