The Urgent Need to Update Institutions Built for a Different Era
As the world’s finance ministers travel to Washington for the annual spring meetings of the World Bank and the International Monetary Fund (IMF) next week, humanity’s future hangs in the balance. Climate change threatens to make the world either inhospitable or unhabitable for billions of people. The global economy is creating more poverty, hunger, and despair. And an unjust war in Ukraine is producing disastrous consequences for vulnerable people just after a pandemic that did the same.
Every country is facing this mix of compounding crises, yet every country has not been affected in the same way. Nor does every country have the same means to withstand these challenges, let alone overcome them. Rich-countries, after stoking their economies with trillions in fiscal and monetary support in recent years, have recently raised interest rates to address inflation, so far without suffering the deep recessions that many feared. In contrast, lower-income countries that could not respond to the pandemic with stimulus packages and quantitative easing are now swamped by debt and projected to grow much slower than expected or needed for sustained development. Unsurprisingly, hundreds of millions of people in those countries are falling behind: poverty and hunger have increased while measures of health care, education, and gender equity have dramatically declined.