Why did the World Bank and IMF come under fire from Guterres? - Financespiders

Why did the World Bank and IMF come under fire from Guterres? - Financespiders

National leaders who were former allies often experience a fallout and fight each other. In Ancient Rome, Marcus Junius Brutus, an ally and reputedly best friend, eventually joined the rebellion against Julius Caesar and conspired to assassinate him in the Senate.

Only last month, the Russian warlord Yevgeny Prigozhin, leader of the private army known as the Wagner Group, and a sworn friend of Putin and the Russian Republic, decided to turn the table on the Russian leadership and launched a coup against his former patron.

Now comes the news of a feud between three erstwhile allied entities working in the international arena: the UN, the World Bank (WB), and the Internal Monetary Fund (IMF). All three bodies emerged from the ruins of the Second World War and benefitted from the poverty alleviation efforts of the last 7.5 decades.

Now, the UN Secretary-General has fired the first salvo against the WB and IMF for their deficiencies during the pandemic, but also for their failure to lift the world out of poverty (and all the other things that went wrong, including climate change, the debt crisis, and the general sense of doom and gloom in the global economic outlook).

The backdrop for this latest round of bickering is the meeting in Paris where, between June 22 and 23, about 100 international organisations and 50 heads of states gathered to discuss how to build a more responsive, fairer, and more inclusive international financial system to "fight inequalities, finance the climate transition, and bring us closer to achieving the Sustainable Development Goals".

The goals announced by the newly formed Paris Summit group are to create a world "where poverty is eliminated and the planet preserved; where vulnerable countries are better equipped to face the crises from climate change and conflicts."

The next paragraph then takes a dig at the current World Bank/IMF superstructure: "We will transform the governance of the international financial architecture to make it more efficient, more equitable, and for the world of today".

Why does this internecine dispute between the UN and the WB/IMF look so odd? First, these three entities come from the same breeding stock. The World Bank and the IMF have provided loans for poverty eradication and temporary financial assistance to countries to help ease balance of payments adjustment.

The UN had a broader charter, and its area of work in helping to eradicate poverty, reduce inequalities, and build resilience so countries can sustain progress had a symbiotic relationship with the Bretton Woods bodies.

Secondly, Guterres' missives come on the heels of the most recent UN and the World Bank agreement, known as the Strategic Partnership Framework (SPF), which covers 2019 to 2023 and includes four key areas of cooperation: finance and implementation support to help countries reach the Sustainable Development Goals (SDGs); decisive global action on climate change; joint work in post-crisis and humanitarian settings; and harnessing data to improve development outcomes. Source: thedailystar.

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