布雷顿森林机构80周年：迈向更大、更好、更具包容性的全球经济治理架构（英文）-波士顿大学

GlobalDevelopmentPolicyCenterJuly2024

TheBrettonWoods

Institutionsat80

TowardsABigger,BetterandMoreInclusive

GlobalEconomicGovernanceArchitecture

BYWILLIAMN.KRING,RISHIKESHRAMBHANDARY,RACHELTHRASHER,MARINAZUCKER-

MARQUES,TIMHIRSCHEL-BURNS

ACKNOWLEDGMENTS

ThisreportbenefitedfromthesupportofMaureenHeydt,SamanthaIgoandHopeMarshall.

SUGGESTEDCITATION

Kring,W.N.,Bhandary,R.R.,Thrasher,R.,Zucker-Marques,M.,Hirschel-Burns,T.2024.“TheBrettonWoodsInstitutionsat80:TowardsaBigger,BetterandMoreInclusiveGlobalEconomicGovernanceArchitecture.”BostonUniversityGlobalDevelopmentPolicyCenter.

Cover:PhotobyKlimMusalimovviaUnsplash.

ABOUTTHEAUTHORS

WilliamN.KringistheExecutiveDirectoroftheBostonUniversityGlobalDevelopmentPolicyCenter.Hisresearchandteachinginterestsfocusoninternationalpoliticaleconomy,globaleconomicgovernance,internationalfinancialinstitutionsandSouthern-ledfinancialinstitutions.Heactivelyconductspolicy-orientedresearchonglobaleconomicgovernanceandworksregularlywithgovernmentoficialsandstafoficialsofvariousinternationalfinancialinstitutions,particularlyregionalfinancialarrangements.HehasservedasaconsultantfortheUnitedNationsConferenceonTradeandDevelopment(UNCTAD)andhasbeenawardedgrantsbytheRockefellerBrothersFund,JapanFoundationCenterforGlobalPartnership,theAcademyofKoreanStudiesandUNCTAD.HisworkhasappearedinWorldDevelopment,DevelopmentandChange,GlobalPolicy,GlobalGovernanceandInternationalRelationsoftheAsia-Pacific.

RishikeshRamBhandaryistheAssistantDirectoroftheGlobalEconomicGovernanceInitiativeattheBostonUniversityGlobalDevelopmentPolicyCenter.Hepreviouslyworkedasapost-doctoralscholarattheClimatePolicyLabintheFletcherSchoolatTuftsUniversity.HeisalsoamemberoftheTaskForceonClimate,DevelopmentandtheInternationalMonetaryFund.

RachelThrasherisaResearcherwiththeGlobalEconomicGovernanceInitiativeandservesasTeamLeadfortheTradeandInvestmentRulesworkstream.SheholdsaJDandaMaster’sdegreeinInternationalRelations,bothfromBostonUniversity.Sheworksonpolicyissuesrelatedtotradeandinvestmentagreements,policyspacefordevelopment,intellectualpropertyandaccesstomedicinesandtheclimateimpactsoftradeandinvestmenttreaties.Sheistheauthorofthebook,

ConstrainingDevelopment:TheShrinkingofPolicySpaceintheInternationalTrade

Regime,publishedbyAnthemPressin2021.ShecurrentlyteachesInternational

EconomicLawandClimateChangeattheBostonUniversitySchoolofLaw.

MarinaZucker-MarquesisaSeniorAcademicResearcherfortheGlobalEconomicGovernanceInitiativeandservesasTeamLeadfortheFinancialStabilityworkstream.Formerly,shewasaPost-doctoralResearcherattheDebtReliefforaGreenandInclusiveRecoveryProjectandafiliatedwithSOAS,UniversityofLondon.Previously,sheworkedattheUnitedNationsConferenceonTradeandDevelopment(UNCTAD)intheDebtandDevelopmentFinanceBranch(GlobalizationandDevelopmentStrategies).Sheisanexperton

sovereigndebt,theGlobalFinancialSafetyNet,internationalfinanceand

currencyinternationalization.Sheisalsoco-chairfortheBrazilT20TaskForce3

onreformingtheInternationalFinancialArchitecture.MarinaholdsaPhDfrom

FreieUniversitätBerlinandaBachelor’sdegreefromFACAMP,andamaster’s

degreefromZhejiangGongshangUniversity.

TimHirschel-BurnsisPolicyLiaisonfortheGlobalEconomicGovernanceInitiativeattheBostonUniversityGlobalDevelopmentPolicyCenter.Hisworkfocusesondevelopmentfinance,financialstability,andtradeandinvestment.HehaswrittenforpublicationsincludingForeignPolicy,JustSecurity,TheLosAngelesReviewofBooksandTheYaleJournalofInternationalLaw,andhisanalysishasbeenfeaturedinoutletsincludingtheNewYorkTimes,theWashingtonPost,theGuardianandtheBBC.Priortohiscurrentrole,TimwasaBernsteinInternationalHuman

RightsFellowwithOxfamAmerica,workingonclimatechange,taxationand

humanrightsastheyintersectwithnaturalresources.Heisatrainedlawyerwith

aJ.D.fromYaleLawSchool.Whileinlawschool,Timco-foundedLawStudents

forClimateAccountability.HeholdsaB.A.inPoliticalSciencefromSwarthmore

CollegeandservedasaPeaceCorpsvolunteerinBenin.

BuenosAires,Argentina.PhotobyLeonardoMirandaviaUnsplash.

CONTENTS

EXECUTIVESUMMARY

VI

INTRODUCTION

1

PILLAR1:FINANCIALSTABILITYANDTHEIMF

2

PILLARII:DEVELOPMENTFINANCEANDTHEWORLDBANK

5

PILLARIII:TRADEANDTHEWTO

6

CONCLUSION

10

REFERENCES

14

EXECUTIVESUMMARY

July2024marksthe80thanniversaryoftheBrettonWoodsAgreementthatestablishedthepost-WorldWarIImultilateraleconomicorder.Theagreement,reachedattheMountWashingtonHotelinBrettonWoods,NewHampshirein1944,ledtotheestablishmentoftheBrettonWoodsinstitutions,theInternationalMonetaryFund(IMF)andtheInternationalBankforReconstructionandDevelopment(IBRD),theprecursortotheWorldBank,bothofwhichintheircurrentforms“remainatthecenterofglobalfinancialgovernancetoday”(Helleiner2016).Whiletheoriginalagreementalsoconsideredtradetobeakeypillar,proposingtheInternationalTradeOrganization(ITO),progresstowardsamultilateralorganizationgoverningglobaltradetookconsiderablylonger.Inthemeantime,ahandfulofcountriesjoinedtheGeneralAgreementonTarifsandTrade(GATT)in1947,whichwouldeventuallyprovidethestructureandformoftheWorldTradeOrganization(WTO),establishedin1995.

ThisreportsynthesizestheworkoftheBostonUniversityGlobalDevelopmentPolicyCenter(GDPCenter)onglobaleconomicgovernancefocusedontheBrettonWoodsinstitutionsacrossthreekeypillarsoffinancialstability,developmentfinanceandtrade.

WhiletheBrettonWoodsinstitutionshaveestablishedarules-based,multilateralsystemofglobaleconomicgovernance,theGDPCenter’spolicy-orientedresearchfindsthatthissystemisinurgentneedoffundamentalreform.ThisreportrecognizesboththebenefitsandcontributionsofthemultilateralinstitutionsestablishedatBrettonWoods,whileidentifyingareaswherereformisrequired.Whiletheseinstitutionshaveexpandedtherangeofoptionsavailableforcountries,theyareindicativeofalonggridlockedsystemthathasnottransformeditselftoaccommodateexistingeconomicrealities.

GDPCenterresearchhasalsotrackedSouthern-ledefortstocreatealternativeinstitutionsacrossthethreepillars(KringandGallagher2019;Barrowcloughetal.2022).Whiletheseinstitutionshavebeenimportantsourcesofadditionalfinancingandviablealternativeoptions,theiremergenceunderscoresthesamegridlockednatureofglobaleconomicgovernancereformandthecrisisoflegitimacyattheheartofthesystem.

Inrecentyears,policymakershaveincreasinglyemphasizedtheneedtoreformglobaleconomicgovernanceinordertoachieveshareddevelopmentandclimatechangegoals.TheBridgetownAgenda,theVulnerable20(V20)’sAccra-to-MarrakeshAgendaandtheAfricaClimateSummitamongothersareexamplesofinitiativesseekingtotransformtheglobaleconomicgovernancesysteminpursuitofsustainabledevelopmentonaliveableplanet.

BuildingonGDPCenterresearch,thisreportoutlineskeyglobaleconomicgovernancereformproposalstoensureabigger,betterandmoreinclusiveBrettonWoodsSysteminthecomingdecades.Weidentifypathwaystoimprovingglobaleconomicgovernancearchitectureandensuringthattherearesu忧cientresourcestofosterfinancialstabilityanddevelopment;improvethefunctioningoftheglobaleconomicgovernancesystem;andtoincreasevoiceandrepresentationforemergingmarketanddevelopingeconomies(EMDEs)withintheseinstitutions.

Policyrecommendations:

•Scaleupresourcesforfinancialstabilityanddevelopmentfinance:

•TheIMFandtheWorldBankneedtobeequippedwithresourcesthatarecommensuratewiththeneedsandprioritiesofEMDEs.TheWorldBankandotherdevelopmentfinanceinstitutionsneedtoplayakeyroleinsupportingthe‘bigpush’ofinvestmentsneededtoachievedevelopmentandclimategoals(KharasandRivard

2022).Likewise,awell-resourcedIMFisneededforanefectiveGlobalFinancialSafetyNet(WorldBankGroup2023).

•Themultilateraltradingsystemshouldfacilitatethescalingupofdevelopment,climateresilienceandmitigationbyincreasingtradewithdevelopingcountriesinclimate-friendlytechnologyandproducts.Anefectiveresponsetotheclimatecrisisrequiresparticipationbyallcountries.IftheGlobalSouthisleftbehind,withoutaccesstokeytechnologytomaketheenergytransition,orstuckoncemorewiththeshortstrawofsupplyingonlyprimarycommoditiesforthenewrenewableenergysupplychains,thosecountrieswillbehinderedfromtakingclimateaction,andwillfaceadditionalpoliticalobstaclestoparticipatingintheglobalproject.

•OverhaullendingpracticesandprioritiesattheBrettonWoodsinstitutions:

•TheWorldBankneedstoshiftitslendingtowardssupportingstructuraltransformationsinEMDEs.Thisstructuralshiftneedstobesupportedbyappropriatelycalibratedinstruments.ThesocialandenvironmentalrisksofabigpushneedtobeminimizedandtheWorldBankoperatingmodelneedstobetterrecognizethefinancialrisksfacedbymembers.

•TheIMFneedstoimproveitslendingpracticesandtools.TheIMFandWorldBankshouldimprovetheirDebtSustainabilityAnalysisframeworktoaccountforthenecessarydevelopmentandclimateinvestmentsandshocks.Moreover,theIMFshouldeliminatesurchargesonborrowingmemberstoavoidfurtherbuildupofdebtvulnerabilities.Finally,lendingconditionsandrestructuringpackagesshouldbeconnectedtogrowthenhancingplans,ratherthanausteritypackages.

•WTOmembersneedtoproactivelytransformthemultilateraltradingsystemsothatitfacilitatesincreasedinnovation,productionandtradeinessentialclimate-relatedproductsanddiscouragescontinuedrelianceonfossilfuels.

•EnhancevoiceandrepresentationacrossallpillarsoftheBrettonWoodsinstitutions.

•FortheIMFandtheWorldBank,asignificantrebalancingofvotingpowermustbecomplementedbyfundamentalgovernancereformstoensuremorevoiceandrepresentationforEMDEs.

•FortheWTO,thismeansmaintainingacommitmenttomultilateraldecision-making,recognizingtheeconomicandsocialimpactsofGlobalNorthpolicymakingontheGlobalSouth,andallowingspecialanddiferentialtreatmentforthosecountriesthatneedmoreflexibilityduringtheenergyandeconomictransition.

Themountingglobalchallengesandtheintersectingcrisesoftheearly2020srequireanambitiousmultilateralresponse.Overtheyears,theBrettonWoodsinstitutionshaveservedasananchoroftheglobaleconomicgovernancesystem.Astheresearchdiscussedinthisreportdemonstrates,theycanandmustplayabigger,betterandmoreinclusiveroleinsupportingsustainabledevelopmentandclimateresilience.ThechallengesconfrontingcountriestodayprovidetheBrettonWoodsinstitutionsandtheirmemberswithanimportantopportunitytotransformtheseinsitutionstomeettheneedsandaspirationsofpeoplearoundtheworld.

Athens,Greece.PhotobyNomadicJulienviaUnsplash.

INTRODUCTION

EightyyearsagoinJuly1944,theBrettonWoodsConferenceresultedinawide-rangingagreementtoestablishaninternationalfinancialarchitecture.Thepost-WorldWarIImultilateralorderthatwascreatedledtotheestablishmentoftheBrettonWoodsinstitutions,theInternationalMonetaryFund(IMF)andtheInternationalBankforReconstructionandDevelopment(IBRD),theprecursortotheWorldBank,aswellasaproposalforanInternationalTradeOrganization(ITO).Whileprogressontradewasconsiderablyslower,thisthirdpillaroftheinternationalfinancialarchitecturematerializedin1947withtheGeneralAgreementonTarifsandTrade(GATT),whichprovidedthefoundationfortheWorldTradeOrganization(WTO)toemergein1995.

Nearlyacenturylater,theBrettonWoodsInstitutionsintheircurrentform“remainatthecenterofglobalfinancialgovernancetoday”(Helleiner2016).Despitetheirevolutionoverthe20thcentury,theinternationalfinancialarchitecturefacesadramaticallydiferentsetofchallengesthatwilltestitsadequacyandlegitimacyoverthenext80years(Volzetal.2024)..Fromclimatechangeandhighlevelsofsovereigndebt,tofinancialinstabilityandthefalloutfromtheglobalpandemic,theinternationalfinancialarchitecturewillbeincreasinglytestedinthecriticaldecadestocome.

ThisreportsynthesizestheworkoftheBostonUniversityGlobalDevelopmentPolicyCenter(GDPCenter)onglobaleconomicgovernancefocusedontheBrettonWoodsinstitutionsacrossthreekeypillarsoffinancialstability,developmentfinanceandtrade.

WhiletheBrettonWoodsinstitutionshaveestablishedarules-based,multilateralsystemofglobaleconomicgovernancethathasbroughtmanybenefitstotheglobaleconomysinceWorldWarII,ourpolicy-orientedresearchfindsthatthissystemisinurgentneedoffundamentalreform.Tothatend,weadvancethreekeyrecommendations.

First,resourcesforfinancialstabilityanddevelopmentmustbescaledupandmadeavailableacrosstheBrettonWoodsinstitutionstobackstoptheglobaleconomyandcountriesinmomentsofcrisisandmeetdevelopmentneeds.Second,lendingpracticesandprioritiesattheBrettonWoodsinstitutionsmustbeoverhauledinordertosupportthestructuraltransformationsrequiredforlow-carbonsustainabledevelopmentandeconomicgrowth.Finally,theBrettonWoodsinstitutionsareinneedofarebalancingofvoiceandrepresentationtoensurethatEMDEsandthemostvulnerablecountrieshaveasayinthepoliciesandpracticestheywillbesubjecttoinmomentsofcrisisandbeyond.

Thereportisstructuredasfollows.Foreachofthethreepillars,thebenefitsandcontributionsoftherelevantBrettonWoodsinstitutionsareexplored,followedbyadiscussionoftheirkeyshortcomingsasidentifiedbyourresearch.Thefinalsectionadvancespolicy-orientedrecommendationsforfundamentalreformstotheBrettonWoodsinstitutionstomakethembigger,betterandmoreinclusiveforthedecadestocome.

TheBrettonWoodsInstitutionsat80:TowardsABigger,BetterandMoreInclusiveGlobalEconomicGovernanceArchitecture1

PILLAR1:FINANCIALSTABILITYANDTHEIMF

ThefirstpillaroftheBrettonWoodsinstitutions,financialstability,isanchoredbytheIMF.TheinternationalmonetarysystemthatemergedatBrettonWoodsfilledacriticalgapintheglobaleconomy.TheIMF,theonlyglobal,multilateralrules-basedinstitutionprovidingbalanceofpaymentsupport,iscrucialformaintaininginternationalfinancialstabilityandpreventingfinancialcrisiscontagioninahighlyglobalizedsystem(RodrikandSubramanian2009;Obstfeld2009).Accordingtoourresearchandthebroaderliterature,theIMFhascontributedtoglobalfinancialstabilityinanumberofways,forexample,byprovidingliquiditytocountriesinneedorbyconductingeconomicsurveillance(Stiglitz2011;BradlowandGallagher2021).

Overthepasttwodecades,therehasbeenaproliferationofalternativesourcesofliquidityfinanceforcertaincountriestocombatbalanceofpaymentcrises(KringandGallagher2019;KringandGrimes2019;Muhlichetal.2022;Barrowcloughetal.2022).AsFigure1shows,currently,theIMFrepresentslessthanone-thirdoftheGlobalFinancialSafetyNet(GFSN)-thenetworkofinstitutionsaimedatsupportingcountriesduringtimesoffinancialdistressincludingtheIMF,regionalfinancialarrangements(RFAs)andbilateralcreditlinesprovidedbycentralbankscalledcurrencyswaps.WhiletheemergenceandexpansionofRFAsandcentralbankcurrencyswaplineshavecontributedtoadiversifiedGFSN,lowerincomecountriesarelargelyexcludedfromtheseresources(Mühlichetal.2022).Thesystemicbiasagainstlower-incomecountriesincurrencyswapsarisesfromtheeconomic,trade,financialandpoliticalconsiderationsofthecentralbanksprovidingtheseswapsinrelationtotherecipientcountries(Godaetal.2024).Moreover,thelackofanAfricanRFAcontributestothisbias(Dagahetal.2019).Ataminimum,theIMFensuresthateconomiesnotconsideredsystemicallyimportanthavealendertoturntointimesofcrisis,thoughthesu忧ciencyoftheseresourcesmaybelimited(Mühlichetal.2022;Godaetal.2024).

Figure1:CompositionoftheGlobalFinancialSafetyNet

Source:AdaptedfromMühlichetal(2022).

Toitscredit,theIMFhasshownsomewillingnesstoevolve,albeitataslowpace.TheIMFrespondedrelativelyrapidlytotheCOVID-19pandemic,recognizingtheneedforcountercyclicalpublicspending(GallagherandMaldonado-Carlin2020;RamosandGallagher2021)andvitally,itsmembersagreed

2TheBrettonWoodsInstitutionsat80:TowardsABigger,BetterandMoreInclusiveGlobalEconomicGovernanceArchitecture

toinject$650billionworthofSpecialDrawingRights(SDRs),supplementaryinternationalreserveassetscreatedbytheIMF,intotheglobaleconomy(Gallagheretal.2020).TheIMFhasalsocometounderstandclimatechangeasbeingcloselytiedtoitscoremandateandlaunchednewclimate-focusedinitiativesliketheResilienceandSustainabilityTrust(RSF)(Titelmanetal.2023).TheIMFalsomovedtowardsbecomingmorepermanentlyresourced,basedonthedecisionstakenatthe16thGeneralReviewofQuotas,theprocessbywhichtheIMFdeterminesthesuficiencyofitsresourcebase,thoughincreasedshareswereultimatelyallocatedequi-proportionally.Hence,thisuniformpercentageincreaseofquotasdidnotadjustthecurrentquotasystemtoreflectthecurrenteconomicweightandpowerofdevelopingcountries(KringandGao2023).WhiletheIMF’sscaleofavailablelendingresourcesdidnotincreaseandsignificantshortcomingsinvoiceandrepresentationremain,thismovetopermanent,quota-basedresourcesisawelcomeshiftalignedwithGroupof20(G20)objectivesforstrengtheningtheGFSNinrecentyears(IntergovernmentalGroupof242022).

TheIMFalsohasakeyroletoplayinsupportingcountriesthatareexperiencingdebtdistress.Tobegin,theIMFmonitorsandassessesdebtvulnerabilitiesofcountries,throughitsDebtSustainabilityAnalyses(DSAs),atooltoassessacountry’sabilitytomeetitscurrentandfuturedebtobligationswithoutexceptionalfinancialassistanceordefault(Hakura2020).TheresultofaDSAcaninfluencetheIMF’sdecisionofwhetheracountryneedsdebtrestructuringandtheamountofdebtreliefthatshouldbeprovided(Zucker-Marquesetal.2024).Moreover,giventheIMF’s‘super-senior’creditorstatus(withthehighestpriorityforrepayment),thisinstitutionprovidesfinancetocountriesduringdebtrestructuring-whennoothercreditorwouldbewillingtoprovideadditionalresources.

WhilethecreationandevolutionoftheIMFasakeypillaroftheBrettonWoodsinstitutionshavebroughtconsiderablebenefits,significantshortcomingsmustbeaddressedfortheIMFtomaintainitscredibilityandlegitimacyastheanchoroftheGFSN.

Intermsofitslendingcapacity,theIMFhasfailedtokeeppacewiththegrowthoftheglobaleconomyorglobaltradeflows,as“itssizerelativetoglobalGDPorglobaltradevolumeshasfallen”(Kringetal.2023;MühlichandZucker-Marques2023).Whilethe16thGeneralReviewofQuotas,resultedinanincreaseinthepermanentresourcebaseoftheIMF,therewasnonetincreaseintheIMF’slendingcapacity(KringandGao2023).Infact,theIMFwouldneedtodoublethequotasoflow-andmiddle-incomecountriesinordertocorrectforstructuralgapsintheGFSN(MühlichandZucker-Marques2023).

Inaddition,theIMFhasbeenwidelycriticizedfortheprocyclicalconditionalityassociatedwithitslendingprograms.TheIMFhaspromotedcontractionaryconditionalitiesinitslending,withborrowingcountries’lackofvoiceintheIMFandlackofalternativelendersoferingthemlittlepowertopushback(Stubbsetal.2021;Rayetal.2022;Merling2022).TheIMF’sconditionalitieshaveregressivedistributionalefects,asgovernmentsareforcedtocutpublicservicesandpublicsectorwages,andasignificantbodyofevidencedemonstratestheseprocyclicalconditionalitiesalsofailtoachievetheirstatedpurposeofstimulatinggrowth(Ocampo2017;KentikelenisandStubbs2023).WhiletheIMF’spublicpositionisthatithasmovedawayfromausterityanditsconditionalitieshaveshiftedtosomedegree(IMF2014),withtheexceptionof2020duringthepeakoftheCOVID-19crisis,theIMF’sfiscalconsolidationconditionalitiesremainprominant(Rayetal.2022).Moreover,theinstitutionremainsexcessivelyskepticalofthepublicsectoranditssocialspendingfloorsareinsuficienttopreventnegativesocialrepercussionsoffiscalconsolidationinlowerincomecountries.

VoiceandrepresentationalsoremainasignificantissueattheIMF,asEMDEsarehighlyunderrepresentedinIMFdecision-makingprocesses(Merling2022).TheshareofquotasandvotingpowerforEMDEsisdramaticallylessthantheirshareoftheglobalpopulation,andalsolagssignificantlybehindtheGlobalSouth’sshareoftheglobaleconomy(Merling2022;MerlingandKring2023).Repeateddelaysinpromisestorealignquotashaveallowedtheseimbalancestogrow

TheBrettonWoodsInstitutionsat80:TowardsABigger,BetterandMoreInclusiveGlobalEconomicGovernanceArchitecture3

andunderminethelegitimacyoftheinstitution(Kringetal.2023;KringandGao2023).Indeed,thepowerofdecision-makingattheIMFisdisproportionatelyconcentratedamongahandfulofadvancedeconomies,“withtheUnitedStatesmaintainingadominantroleandvetopowerofmajorreforms”(Merling2022).ThislackofvoiceandrepresentationforEMDEsisespeciallyconcerningconsideringthattheyaremostlikelytoneedassistancefromtheIMFandbesubjecttoitsconditionality,allwhilesimultaneouslyholdingtheleastinfluenceovertheFund(Merling2022).Furthermore,undersizedquotasharesleadtoinadequatelendingthresholdsandSDRallocationsforEMDEs,whichfurthercontributestofinancialinstability.

Figure2:IMFQuotasandVotingSharesComparedtoShareofPopulationandGlobalEconomy,byGrouping

Source:MerlingandKring2023.

Finally,theIMFbearsresponsibilityfortheinadequaciesoftheglobalsovereigndebtarchitecture.Asthelenderoflastresort,itholdssignificantinfluenceoverdebtrestructuringnegotiations,whichhavebecomeincreasinglycomplexduetorisingdebtburdensandamorediversecreditorlandscape,asshowninFigure3.

Figure3:EMDEs’(excludingChina)PublicExternalDebtCompositionbyCreditor,2008-2022,inUSDBillions

3,500

3,000

Billions(USD)

2,500

2,000

1,500

1,000

500

0

Bondholders

China(Bilateral)

ParisClub(Bilateral)

OtherBilateral

OtherPrivateCreditorsWorldBank

OtherMultilateralCreditors

UseofIMFCredit

200820182022

Source:ZuckerMarquesetal.(2024)basedonWorldBankInternationalDebtStatistics(2023).

4TheBrettonWoodsInstitutionsat80:TowardsABigger,BetterandMoreInclusiveGlobalEconomicGovernanceArchitecture

AkeyproblemofthecurrentdebtrenegotiationprocessliesintheflawedDSAs.TheIMF’sDSAsoftenfailtoconsiderthelevelofspendingrequiredtomeetdevelopmentandclimategoals,aswellasclimateshocks(Gallagher&Maldonado2022;Zucker-Marquesetal.2024),resultingininadequatedebtreliefpackagesormisdiagnoseswherecountriesneedingdebtreliefarenotidentifiedassuch.FlawedDSAscan,inparticular,havenegativeconsequencesforthemostdebtandclimate-vulnerableregionslikesub-SaharanAfrica(Gallagheretal.2023)andgroupsliketheVulnerableTwenty(V20)GroupofMinistersofFinanceoftheClimateVulnerableForum(Bhandary&Marins2024).

Additionally,theIMF’spracticeofapplyingsurcharges-oradditionalfeesonborrowingmembers-isnotinlinewiththeroleoftheIMFasalenderoflastresortor‘super-senior’creditor,assurchargeshavebeenshowntoexacerbatedebtvulnerabilities(StiglitzandGallagher2022).SurchargeswereinitiallydesignedtoincentivizeIMFmemberstorepaytheirloansquicklyandbuildreservesforthepossibilityofdefault.However,surchargeshaveproventobecounterproductive,ashigherborrowingcostsimposedonIMFmembersjeopardizetheirabilitytorepaytheirdebtandfurtherincreasesrelianceontheFund(StiglitzandGallagher2022).

PILLARII:DEVELOPMENTFINANCEANDTHEWORLDBANK

IntermsofthedevelopmentfinancepillaroftheBrettonWoodsinstitutions,multilateraldevelopmentbanks(MDBs)havebeenanimportantsourceoflow-cost,long-termfinanceforEMDEs,providingfinanceandexpertisetocountriesaroundtheworld.MDBshaveanimportantroletoplayinsupportingthetransformationofeconomiesandprovidingcounter-cyclicalfinance.Overtime,MDBs,suchastheWorldBank,haveexpandedtheirfocusfrompredominantlyinfrastructuretosocialsectorsaswell.In2022,USTreasurySecretaryJanetYellencalledontheWorldBanktoevolveitspracticestohelpclientgovernmentsaddress21stcenturychallenges(Yellen2022).TheWorldBa