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david_mcnair Profile picture
@David_McNair
Apr 12 • 25 tweets • 12 min read Twitter logo Read on Twitter
The World’s Finance Chiefs are in DC for the #springmeetings2023 of the #IMF and #WorldBank.

So what happened so far? 🧵

#FundTheFuture Image
SLOWDOWN:

The IMF’s latest forecasts showed that growth will slightly decline to 2.8% this year (0.1 percentage points below January projections) before rising to 3% in 2024.

Global inflation will fall from 8.7% in 2022 to 7% in 2023 and 4.9% in 2024

imf.org/en/Publication…
PROMISES:

The @G24 which coordinates the position of developing countries called for rich countries to deliver the $100bn in SDRs that they promised in 2021 and channel them through multilateral development banks.
SEATS:

G24 called for more votes and a third Board Chair for Sub Saharan Africa at @IMFNews

And for @WorldBank to increase lending to middle income countries through better leveraging its balance sheet

But not at the expense of grants and loans to low income countries.
WORLD’S BANK:

120 serious figures called on the @WorldBank to implement a 10 point plan for reform of the institution.

DEMAND:

New data will show huge demand for IMF trusts.

Resilience and Sustainability Trust has received SDR 25.4bn (target SDR 33bn)

Poverty Reduction and Growth Trust has received SDR 9.1bn (target SDR 12.6bn)

Saudi Arabia, Ireland & Switzerland are expected to pledge.
DROP THE DEBT:

The @WSJ is reporting a possible debt breakthrough with China dropping its demand that multilateral creditors take haircuts

In exchange for them committing new concessional financing to countries whose debt is being restructured.

wsj.com/articles/china…
POOR PAY MORE:

@UNDP has a new report that shows the full cost of credit rating idiosyncrasies in Africa.

The so called ‘African Premium’ is $74.5 billion in excess interest and foregone funding.

undp.org/sites/g/files/…
UPDATE: @melindagates called for a reboot of the financial system so that it works for women and the world

on.ft.com/3Uq3pce
TRUST: Juan Manuel Santos of @TheElders called for a rebuilding of trust in multilateralism.

on.ft.com/3Uq3pce
ERROR:

A new study suggests Christine Lagarde was maybe wrong about barriers at the @ecb to unlocking $200 billion for development via SDRs.

devex.com/news/was-lagar…
EXPLAINER:

@szmakka lays out the rationale for the 10 point plan for the @WorldBank to become the World’s Bank.
REFORM

@fatenaggad lays out the reforms that the @WorldBank needs to make.

‘The World needs change agents like never before’

african.business/2023/04/long-r…
WEDNESDAY UPDATE

What’s the latest from the #IMF #WorldBank #springmeetings2023? 🧵 Image
TIGHTENING

@IMFNews fiscal monitor that nearly three-quarters of countries tightened both fiscal and monetary policies to curb inflation.

Global debt levels are rising faster than predicted, driven mainly by the U.S. and China.

imf.org/en/Publication…
1%

The steering committee of the World Bank and IMF—failed to release a communique.

The chair announced an additional $50bn over ten years through tweaks to the @WorldBank’s balance sheet.

$5bn a year is less than 1% of the financing need.

But serious shifts are on the table Image
THE DETAIL

The committee agreed to:

👉🏿lower the Bank’s minimum equity-to-loan ratio from 20% to 19%

👉🏿a hybrid capital pilot

👉🏿a bilateral guarantee program
DOOR OPEN

They agreed to make progress on:

👉🏿Elimination of the Statutory Lending Limit

👉🏿Balance sheet optimization for IDA

👉🏿An IDA Crisis Facility

👉🏿Enhanced callable capital & hybrid capital

👉🏿SDR channeling

worldbank.org/en/news/statem…
EXPECTATION

G7 Finance Ministers underscored their commitment to low- and middle-income countries.

They pledged progress on
👉🏿MDBs’ evolution
👉🏿SDR channeling
👉🏿Resources for IMF Trust Funds
👉🏿Debt vulnerabilities
👉🏿Global Health &
👉🏿Climate change

consilium.europa.eu/en/press/press… Image
VS REALITY

New overseas aid stats show a whopping $29.3bn never went overseas. 🤷‍♂️

The UK now spends more aid in the UK than outside the island.

NO DEAL

The Global Sovereign Debt Roundtable agreed on improving information sharing and setting deadlines.

A proposal for a three-month deadline from when the IMF reaches a staff-level agreement with a debtor country was not agreed.

But… 👇🏾
WORK CONTINUES

On…

👉🏿comparability of treatment;
👉🏿cut-off dates;
👉🏿treatment of arrears;
👉🏿the scope of debt to be restructured (including domestic debt);
👉🏿principles on debt service suspension.

worldbank.org/en/news/statem…
SOMETHING SPECIAL

France will call on countries to channel at least 30% of their SDRs to vulnerable countries?

How?

Finance Minister Bruno Le Maire believes an SDR bond proposal is promising

KICK THE CAN

Overall it doesn’t feel like the rhetoric on the #polycrisis is being met with reality.

one.org/us/press/sprin… Image
LIGHT RELIEF

If all of this seems a bit depressing here’s something (a bit) less heavy. 👇🏾

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More from @David_McNair

david_mcnair Profile picture
Feb 9
This week the Pope visited Africa.

“Hands off Africa!.. it is not a mine to be stripped or a terrain to be plundered.”

He said to an applauding crowd in Kinshasa.

A 🧵about what the Pope (and Vladamir Putin) understand about Africa that many don’t.
Around 95% of Africans are religious;

Half are Christian, 1 in 3 are Muslim.

In 1910 there were 1 million Catholics in Africa
In 2010 there were 171 million
In 2021 there were 256 million
Support for religion is not just

👉an old person’s thing,

👉a rural thing,

👉or a thing for those without education.
Read 21 tweets
david_mcnair Profile picture
Dec 8, 2022
This week Ghana is almost certain to default on its debt.

Another canary in the coalmine for a much bigger debt problem that’s hurtling towards us.

A $2.5 trillion #debt shock

A 🧵on debt, why it matters, and why poor countries pay more to borrow money. 👇 Image
Let’s start with where we are in the economic cycle.

In 2007/8, when Lehman Brothers collapsed, the Financial Crisis resulted in a deep recession, a decade of austerity and arguably a wave of populism.

But it also led to a decade of close to 0 interest rates.

Cheap money 💸 Image
What does cheap money do?

Well in this case it saved the financial system.

But it also had side major effects.

Those with assets (shares, houses, wine, art, vintage guitars) saw their wealth increase. Those without saw their buying power diminish. Image
Read 18 tweets
david_mcnair Profile picture
Dec 6, 2022
I asked #ChatGTP four questions that have been on my mind.

/1 How do we reform the Bretton Woods system? Image
/2 How do we reform the IMF? Image
/3 How do we reform the World Bank? Image
Read 4 tweets
david_mcnair Profile picture
Nov 15, 2022
As #G20 leaders meet in #Bali they should start thinking about systemic reforms fit for the #polycrisis we are in.

Here’s a proposal I wrote for @CarnegieEndow

@adam_tooze @Noahpinion @davidmcw @MazzucatoM @HelenClarkNZ @GayleSmith @micksheldrick

carnegieendowment.org/2022/11/15/glo…
Here’s the #G20 communique.

Lots of warm words on climate and food insecurity but not much new.

From a quick read there’s nothing new on debt, some welcome language on @IMFNews Special Drawing Rights.

linktr.ee/mediacenterg20 Image
And here’s a great analysis from @FredRoder
Read 6 tweets
david_mcnair Profile picture
Oct 27, 2022
There’s a lot of debate this week about the UK’s role in the world. 🇬🇧

A new PM

Maybe a new trade deal with India.🇮🇳

A debate that started with #brexit of course

But what about the EU’s role in the world?

#StateofEU @friendsofeurope @africaeuropefdn
The EU is the world’s largest trading bloc. 🇪🇺

But in reality, it’s hemorrhaging influence in emerging markets and developing countries.

Why?

Partly because China, Russia, Turkey, and Gulf states have massively increased investments and military support.

#StateofEU
Russia, the largest supplier of weapons to Africa, now provides 44 percent of major arms to the region. sipri.org/sites/default/…

China committed about US$160 billion in infrastructure financing in Africa between 2000 and 2020. bu.edu/gdp/chinese-lo…
Read 20 tweets
david_mcnair Profile picture
Oct 10, 2022
This week the world’s finance chiefs gather in Washington DC.

Storm clouds are gathering.

What’s going on?

What will finance ministers do about it?

And what does it have to do with the Queen and a Pint of Guinness?

A🧵
Everyone is focused on inflation.

So, let’s focus on that first before getting into the broader economic outlook.

Headline inflation (based on a basket of consumer goods and services, including food and energy) is 8.3% in the US and 10% in the Eurozone.
But it’s much worse in emerging economies.

Inflation reached double digits in 17 sub-Saharan African countries, with nearly 9 in 10 countries in the region experiencing inflation rates above 5%.
Read 25 tweets

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