The World Bank and IMF spring meetings are taking place this week in the shadow of rising geopolitical uncertainty. Upcoming elections in the US, ongoing conflict in Ukraine and now the eruption of hostilities between Israel and Iran are all weighing on policymakers’ minds. But amid these crises, the international community must not lose sight of the pressing need to keep funding global development, health and climate initiatives.
These issues have started to take a back seat. New data from the OECD, the rich-country think-tank, shows that advanced nations’ official development assistance budgets have increased in recent years. But the majority of that rise represents funding for Ukraine and the cost of hosting refugees from Ukraine and elsewhere; more than a quarter of UK ODA last year went towards asylum costs. The amount allocated for multilateral organisations, including the World Bank, IMF, and health funds such as Gavi, the immunisation initiative, has only increased slightly overall, and even shrank in two of the last six years.
Moreover, low-income countries’ access to finance has come under pressure. A wave of countries has been flirting with default, as high rates have locked them out of bond markets. China, once the largest bilateral creditor to developing countries, has stepped back from funding, instead starting to draw back capital as loans come due. China and private creditors have also confounded the Paris Club’s efforts to restructure debt. This has forced countries into a difficult choice: endure a lengthy default like Zambia, or tighten already strained budgets like Nigeria.