Devex Invested: Highlights and lowlights from the World Bank Spring Meetings

The line of black cars has left Pennsylvania Avenue and the security barricades have come  down as Washington, D.C. returns to normal after the World Bank and International Monetary Fund Spring Meetings.

But the jury is still out on just what the summit accomplished, and whether the World Bank’s plans under President Ajay Banga are ambitious or fast enough to meet the moment.

There were, as always, some big announcements — notably on energy access and health care — and there seems to be limited progress on debt.

But investors and private sector folks tell me that the changes so far are not enough. A new centralized guarantee platform is merely a good start, they tell me. The discussions at this year’s meetings were “peak private sector hype,” and these days, “there’s much less tolerance for bombastic statements about private sector leverage,” Rachel Kyte, a climate professor at Oxford University’s Blavatnik School of Government, tells me.

In some ways the conference was also a reality check. Data released by the ONE Campaign last week shows that more money is flowing out of global south countries than is coming in. That story may not have headlined events but it’s what people were talking about. And some were concerned about a disconnect between the rhetoric of the World Bank and IMF and the reality of funding flows and the impact on individuals and the “real economy.”

The pressure is on to start delivering. In this edition you’ll find my takeaways from last week.

Listen: World Bank-IMF takeaways — Unpacking the Spring Meetings

Read: Global south now repays more in debt than it gets in grants and loans (Pro)

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The big announcements

The World Bank announced an ambitious commitment to help low- and middle-income countries provide 1.5 billion people with health care by 2030 — double the number of people it has reached in the past five years.

Though details are sparse, there was some agreement that the bank will likely need more money to get there — whether through an International Development Association replenishment or otherwise. It comes amid fear that lower-income countries face an alarming health finance landscape, my colleague Michael Igoe reports.

Read: World Bank aims to bring health care to 1.5 billion people (Pro)

Also read: At Spring Meetings, alarm bells sound over global health finance 

The bank also announced that it would aim to bring electricity to 250 million people in Africa by 2030, with the African Development Bank saying it would do so for an additional 50 million people.

To hit the target, the World Bank will double its spending on energy access, utility reform, power generation, transmission, and distribution in the region from $3 billion to $6 billion, Sophie Edwards reports for Devex.

This commitment, too, seems light on details, and Kyte called it underwhelming. Importantly, it may also need more money to come to fruition.

Read: World Bank, AfDB aim to bring electricity to 300 million Africans

Cough up the cash

The bank is looking to get bigger by leveraging its balance sheet and existing resources, trying new financing mechanisms, and of course potentially asking shareholders to pony up through the IDA replenishment and a potential capital increase.

On the eve of the Spring Meetings, MDBs issued reports assessing their callable capital commitments, and last week, the United States, Japan, Germany, and the United Kingdom, all World Bank shareholders, said they stand behind those pledges. What has emerged is that the risk of a call is low, but if it comes about, shareholders are in a good position to respond.

As a reminder, callable capital is funding that shareholders have committed but that is tied to certain conditions — generally to prevent them from defaulting. The hope is that the World Bank will be able to treat callable capital differently and better leverage it to increase how much it  can lend.

Researchers at the ODI think tank are proposing creative ways the callable capital could be used: as a guarantee, a perpetual bond facility, or as a form of specialized capital in and of itself. Transparency is critical — the recent MDB reports help on that front — but now it will be up to MDBs and their shareholders to push ahead, they say. Still, it’s unclear if it changes the calculus for credit rating agencies.

The question about a capital increase remains out there — major shareholders represented in the Development Committee were notably silent on the matter in the chair’s statement.

But in the meantime, donors pledged about $11 billion to some of the bank’s “innovative” funding instruments, including its portfolio guarantee platform, its hybrid capital mechanism, and the new Livable Planet Fund. The bank said it can leverage those funds to provide some $70 billion over 10 years.

Perhaps a more attention-grabbing proposal to fund climate and development: Tax the rich. G20 ministers meeting during the Spring Meetings discussed a Brazilian proposal to address inequality and tackle poverty by taxing the super rich. A task force also met to design levies on fossil fuel producers, aviation maritime fishing, and more to come up with more climate and development cash, Chloé Farand reports for Devex.

And remember Special Drawing Rights, the reserve currency issued by the IMF? Efforts to rechannel them may not be dead yet. I was told progress may be coming.

Opinion: How callable capital can be used to grow MDB lending capacity

Read: Push to tax polluters, mega-rich to pay for climate action takes off

+ Catch up on all of our coverage of the Spring Meetings.

What about the private sector?

There was a lot of talk about how public capital could be used to attract private funds, but the reality is that MDBs generally aren’t doing a lot of mobilization these days.

But private sector mobilization is a priority for the bank and for the U.S., one of its biggest shareholders. It’s “at the top of our strategic agenda,” according to Alexia Latortue, assistant secretary for international trade and development at the U.S. Treasury.

So what does the U.S. Treasury want to see at the World Bank? Staff incentives for mobilization, a greater focus on instruments to de-risk investments, more and better data sharing – especially with investors, more funding to design investable projects, and a greater focus on policy reforms to enable private sector investment.

Listen: The skinny on World Bank plans to harness private capital

+ Check out more episodes of our special podcast series in which I talk with a variety of stakeholders about World Bank reforms and the Spring Meetings. Listen on Spotify, Apple Podcasts, or search “Devex” in your favorite podcast app for all the episodes. 

A bright spot for debt

It could easily be lost in the shuffle, but the IMF’s executive board approved new debt policies last week that I’m told will actually make a difference.

The proposals “introduce more predictability, transparency and certainty in debt restructurings, financing and negotiations,” Eric LeCompte, executive director of Jubilee USA, said in a statement.

That doesn’t mean everything is going well. The G20 common framework for handling debt is not working — Indermit Gill, the World Bank’s chief economist, says as much.

And on social media platform X, former World Bank President David Malpass wrote that “The @g20org’s Common Framework for Debt is designed and run by China, the Paris Club, and the IIF [Institute of International Finance] creditors to benefit themselves, causing massive damage to people in developing countries.”

Better together?

What could really improve the MDB system, many people tell me, is for those institutions to create common policies and processes so borrowers can more easily work with them and avoid parallel systems.

At a retreat on Saturday, the leaders of 10 MDBs agreed to “concrete and actionable deliverables,” according to the Inter-American Development Bank, which chairs the Heads of MDBs group this year. You may remember that IDB President Ilan Goldfajn told me earlier this month he was pushing for this, though he said getting there was a bit like herding cats.

They plan to:

• Deliver the first common approach to measuring climate results on adaptation and mitigation.

• Expand the types of disaggregated data they share and scale up local-currency lending and foreign exchange hedging solutions.

• Work on joint impact evaluations and align on nature and biodiversity indicators by next year.  

• Review proposals on country-owned platforms and move toward a common understanding of how they can be used.

They are also harmonizing procurement practices and look to accelerate co-financing including through a new Collaborative Co-financing Portal. I attended the launch event for the portal, which allows members to upload and share information on projects that need support from others. It’s meant to improve transparency and coordination. Let’s see how much it gets used.

ICYMI: IDB reforms, new funds have been approved. What's next? (Pro)

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