When policymakers gather in Bangkok, Thailand, next week, there will be plenty of familiar issues on the agenda: debt, jobs, private investment, climate, and AI. But some of the most important questions sit underneath those headlines.
The geopolitical shocks of the past year will loom large. Oil and food prices have risen sharply, borrowing costs remain high, and policymakers are arriving in Bangkok with very different amounts of fiscal room to respond. At the same time, aid budgets are shrinking just as private financing is getting more expensive and governments are having to make harder choices about where scarce development finance should go.
What will these meetings mean for the poorest countries? How well are the World Bank and IMF holding up when their shareholders have increasingly different visions for the global order? Will Europe keep backing the multilateral system as it cuts and reshapes its own aid? And what should the Bank actually do about AI, beyond recognizing that it will change developing economies?
Ahead of the meetings, four CGD experts joined Devex senior reporter Adva Saldinger to discuss what they’ll be looking out for in Bangkok:
Rachel Glennerster: How well are the World Bank and IMF holding up in a world of crises?
This year, there’s an economic backdrop which is very closely linked to politics even though the World Bank and IMF must, according to their mandate stay out of politics because conflicts around the world are having big impacts on the global economy. At the Spring Meetings, people were talking a lot about the risk of higher food prices: now they are here: soybean prices are up 27 percent and wheat prices 37 percent on a year earlier. Along with Brent crude up 53 percent over the last year this is feeding into tougher times for low- and middle-income countries (LMICs) especially oil importers.
We’ve also seen this big increase in borrowing costs in the United States. One question I’ll be thinking about is how much that feeds through into higher borrowing costs for LMICs. So far, these have not risen to the same extent: there’s been some decoupling which is interesting.
There is also an encouraging part of the story that we don’t talk about enough.
In particular, there is a narrative, and has been for some time, that multilateralism is falling apart and not able to respond to global shocks. Actuality, the international financial institutions are the part of the international cooperation and multilateralism that is continuing to work well.
You have countries that are profoundly divided (even at war) still sitting down across the table several times a week at the World Bank and IMF and hammering out multi-million-dollar joint loan deals on a regular basis. That’s quite striking—and it’s an important part of the backdrop to these meetings.
Clemence Landers: What’s on offer for the poorest countries?
What I’m going to be most closely watching is what’s on offer for the poorest countries.
There’s a remarkable story here in that a lot of countries have done surprisingly well weathering the crises of the past few years. Many emerging markets have built solid macroeconomic buffers, have deeper domestic markets, and more protected from the vagaries of the global economy. We’ve seen major bond selloffs in the United States and other advanced economies, but this has not translated in dramatic ways to established emerging markets in ways that have happened in the past.
That's a very good demonstration of resilience and tangible progress.
But there’s also another group of countries that are hyper reliant and therefore to the international financial system. A lot of countries in sub-Saharan are issuing Eurobonds at 9 or 10 percent, rolling over debt that they took on at much more affordable rates.
That makes IDA—the World Bank’s arm for the world’s poorest countries—an incredibly important port of call. Its next replenishment is coming up, and there have been quiet whispers among some of the biggest donors that they simply won’t be able to sustain the commitment levels they have in the past.
In this context, I’ll be looking for early indications of how much donors think they can contribute, but also at the policy agenda around IDA. There is a lot of reform needed around focusing IDA on the most vulnerable countries which really rely on it as part of the global financial safety net.
Debt will be another big topic. It has been at the top of the agenda for years, but the conversation has moved—from one focused on restructuring toward one focused on liquidity.
It’s not that there is no appetite to lend. We’re seeing some African bond issuances that are three, four, even five times oversubscribed. What we have seen is a big global repricing, from countries financing themselves at relatively affordable rates to now facing rates where you can end up paying more in interest than you do in principal.
And it’s not just private markets. Some countries will soon be repaying significant amounts to the IMF after the financing it provided during COVID, while bilateral creditors are also pulling back.
There are a lot of good elements of a solution out there, including credit enhancements, guarantees, and debt-suspension clauses. But ultimately, we need a bargain around financing flows remaining affordable for the lowest-income countries. I think that should be a big topic in Bangkok.
Mikaela Gavas: Will Europe’s multilateral commitment hold up?
There are two things I’ll be watching from a European shareholder perspective.
First, whether Europe’s multilateral commitment holds up as its aid shrinks and becomes more self-interested. EU aid is moving from grants to investment, and from poverty reduction toward strategic and commercial interests. At the same time, European aid budgets are increasingly being absorbed by Ukraine and the neighbourhood.
European shareholders will want the World Bank to step up. The question is whether they see IDA as a shock absorber for the aid they’ve cut elsewhere, or as just another budget to squeeze.
Second, I’ll be looking at whether European shareholders push the Bank (and themselves) to aim scarce risk capital at low-income and fragile countries.
The Bank has reported a record $112 billion in private capital mobilised, but only around $3 billion of that goes to low-income countries. Europe has the same problem. Money goes where it is easiest to place: banking and financial services, largely in middle-income countries. European development finance institutions crowd the same space and the same low-risk segments, while the hard cases—fragile and low-income countries, local-currency finance, early-stage investment, first-loss capital—get the least.
For Europe, this should be a wake-up call. If it really wants climate, fragility, and the poorest countries to stay central, it’s going to have to make that case itself and pay for it.
Europe wants a partner that multiplies its money and fits its strategy. Energy shocks, instability in the neighbourhood and in Africa, and migration pressures are hitting Europe directly. A Bank that works well on those issues is very much in Europe’s own interest. But Europe’s credibility depends on matching its rhetoric with its own money and a coordinated voice, and that’s elusive at the moment.
Markus Goldstein: What will the World Bank say about AI?
Looking ahead to next week, I’m watching AI. The World Development Report is significantly different in some ways from the digital strategy the Bank unveiled earlier this year, so I want to see how that plays out.
There are three things in particular that I’m looking at.
The first is AI sovereignty. The World Development Report rightly makes a strong argument that thinking about sovereignty in the traditional sense can be a trap. So, the question for me is: how do we help countries think about, and build policies for, agency in this world? Diversifying the models they use is one idea, but I think there’s a lot more work to do in that space. And it’s moving incredibly fast.
The second is labor markets. This is a known unknown. Every possible prediction has been made about what AI will do to jobs, and one of them is right—but we have no idea which one it is.
In an environment like that, can we think about a concerted response to build resilient labor markets? That might mean portable benefits, certifications, cash transfers to help people adjust, or more nimble job retraining. I’d like to see more from the Bank on that.
And then the third one is more of a big bet: is there a transformative opportunity here?
We saw leapfrogging in developing countries with the advent of mobile phones. Could AI create something similar? Think about a ministry of agriculture that has data on staffing, pesticide orders, and pest detection, and can get those different sources of information talking to each other. You could have a really transformative moment for government services and markets.
So, I’m wondering whether we’ll see that kind of bold argument from the Bank. There’s a lot of discussion about the risks and the gaps, and rightly so. But I’d also like to see a proactive response on what developing countries can actually do with this technology.
