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Rapid changes in the world, especially the remarkable growth of so many once-poor countries and the revolutions sweeping across North Africa and the Middle East, will have tremendous consequences for institutions like the World Bank. The Bank-Fund Spring Meetings start next week and it’s a chance for shareholders and Bank management to check-in and throw issues on the table. Among the many big trends and questions about the future of the Bank, here are a few on my mind:
It’s the season for trade talks with Africa again. The annual AGOA Forum, which opens today, is one of those ideas that sound terrific: assemble all of the relevant U.S. and African policymakers to discuss ways of generating greater commerce. Last year the forum was in Nairobi; this year it’s two days in Washington and then three days in Kansas City (consistent with the administration’s food security focus).
A special new lending facility was announced in July 2009 with the objective of providing up to $17 billion in new loans through 2014 and, to entice cash-strapped borrowers, the lender is waiving interest payments for the first two years. This may sound like dangerous new short-term teaser offers for sub-prime borrowers. But this isn’t coming from Countrywide Financial. It actually is a new IMF facility for low-income countries, including some of heavily indebted poor countries (HIPCs) who are just barely coming out of the last debt crisis.
The stated objectives of the new IMF facility are laudable: to offset the effects of the global economic crisis by boosting international reserves and supporting adjustment policies. And yes, the overall terms are more concessional than past IMF loans. Nonetheless, the net impact on national debt levels may be significant. And it was just four years ago that the IMF committed to cancel roughly $6 billion in bad loans to many of these very same countries.