Originally posted in The Daily Star on 5 May 2025
The Spring Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) on April 21-26, 2025 were held at a time of deep uncertainty in the global economy. The catchy theme of the meetings, “Jobs: The Path to Prosperity,” was an attempt to project optimism behind such difficulty. But the world is currently grappling with intensifying trade protectionism, surging debt burdens, slowing economic growth, and a growing climate emergency. For the least developed countries (LDCs) and small island developing states (SIDS), the meetings fell short of offering concrete and transformative solutions for several reasons.
A world in flux
The global economic context preceding the meetings was bleak. The IMF downgraded the global GDP growth for 2025 to 2.8 percent from the 3.3 percent forecast earlier. This downward revision was prompted by heightened trade tensions, particularly following the sweeping tariffs introduced by the US. The resultant retaliatory tariffs from China have strained global supply chains and added inflationary pressure, further dampening growth prospects.
At the same time, the world is also experiencing “aid shock” as donor countries announced deep cuts in official development assistance (ODA). According to the Organisation for Economic Co-operation and Development (OECD), in 2024, international aid from official donors fell by 7.1 percent in real terms compared to 2023. This was the first drop after five years of consecutive growth. Net bilateral aid flows from OECD’s Development Assistance Committee (DAC) members to LDCs fell by three percent in real terms compared to 2023. This came at a time when fragile economies are more dependent on concessional financing than ever before.
The aid crisis has emerged as a silent emergency for these countries. With the shuttering of USAID funds and other traditional donors slashing aid budgets, grant-based financing is drying up. In response, both the IMF and World Bank have doubled down on mobilising private capital. However, without equity, affordability, and accountability, the effectiveness of such private funds will be under scrutiny.
Jobs as a silver bullet?
WBG President Ajay Banga highlighted job creation as the linchpin of poverty eradication since a large number of youth in developing and poor countries enter the workforce every year. The World Bank’s new strategy stands on three pillars: foundational infrastructure, business-enabling governance, and private capital mobilisation. However, concerns remain as business-enabling governance and private capital could fall short in their efforts to bring the large informal workforce to the formal sector, ensure job security, and improve job quality.
Debt distress and the mirage of reform
Debt featured prominently in this year’s meetings. The IMF warned that global public debt is projected to reach nearly 100 percent of global GDP by 2030. For developing economies, debt servicing costs are becoming unsustainable, which often exceeds spending on education and health. In sub-Saharan Africa, debt service already outpaces social sector expenditures. More worryingly, climate risk is still not fully embedded in debt sustainability analyses. It is now clear that climate change is a macro-critical issue and should be integral to future debt frameworks. Yet, no decisive move was made by the Bretton Woods Institutions to adopt climate-contingent debt clauses or ensure meaningful creditor participation in future restructurings.
Climate change: A side act, not centre stage
Despite earlier commitments, climate issues were conspicuously sidelined during the 2025 Spring Meetings. Under pressure from its largest shareholder, the US, the World Bank seems to have shifted its focus back to “core mandates.” This has effectively marginalised climate adaptation financing. Although the World Bank committed to allocating 45 percent of its financing towards climate-related projects by FY2025 at the 28th Conference of Parties (COP28), the lion’s share of these funds still targets mitigation rather than adaptation. For climate-vulnerable countries like Bangladesh, adaptation finance is essential, especially in the face of rising sea levels, erratic monsoons, and flooding. Moreover, the continued preference for loans over grants exacerbates debt vulnerabilities and undermines the countries’ long-term resilience. Worse still, the World Bank’s energy strategy, which includes nuclear power and natural gas, poses risks to low-income countries as it could lead to a high-carbon trajectory. The needs of energy-insecure communities of these countries should be fulfilled through community-based, decentralised renewable systems.
There was a call by the G24, representing emerging and developing economies, for urgent reforms to reflect changing global economic realities. These calls included lowering the cost of World Bank loans for middle-income countries, greater voice for borrowing countries in governance, and innovative use of Special Drawing Rights (SDRs). On the other hand, another major group, the G20 members, representing about 85 percent of global GDP and two-thirds of the world’s population, did not issue a communiqué. This indicates the fragility of today’s multilateral system, where countries could not arrive at a unified communiqué.
Is Bangladesh falling through the cracks?
For Bangladesh, the outcome of the 2025 Spring Meetings is not encouraging. While the rhetoric of job creation may align with its vision of harnessing its demographic dividend, the IMF and World Bank frameworks do little to address the structural hurdles the country faces, including declining export competitiveness due to tariffs, a mounting subsidy bill, and climate-induced displacement. The issue of informality in the labour market is also acute, with more than 80 percent being engaged in the informal sector for employment.
Bangladesh, as a lower-middle-income country, would benefit significantly from multilateral reforms in the financial architecture. Its access to concessional finance is shrinking as it prepares for graduation from the LDC category in 2026, even though it still faces climate vulnerabilities and foreign exchange constraints. Hence, the inability to reach a consensus on reform is a setback for countries requiring international finance.
Bangladesh is also a candidate for energy and infrastructure investments under the World Bank’s private capital mobilisation model. However, without guarantees on fair pricing, social safeguards, and climate alignment, these investments may deepen rather than mitigate risk. The country also stands to lose from the continued emphasis on fiscal consolidation—a core plank of IMF conditionality—at a time when it needs fiscal space to invest in resilience, health, and education.
Moreover, Bangladesh’s debt-GDP ratio, while manageable compared to peers, is inching upwards. The combination of tighter global financing conditions and rising interest rates poses serious challenges. Yet, the World Bank and IMF meetings offered little in terms of concessional refinancing or structured debt relief mechanisms that Bangladesh and other vulnerable emerging markets and developing economies could benefit from.
Hence, while the 2025 Spring Meetings emphasised stability and continuity, they also highlighted the growing disconnect between the Bretton Woods Institutions and the realities of their borrowers. The Spring Meetings indicate that the IMF and World Bank are at a crossroads. They can either continue to operate within the confines of outdated paradigms or embrace a new vision of multilateralism that prioritises climate justice, debt sustainability, and inclusive development.
The coming months offer an opportunity to continue the momentum of such demands. With the Fourth International Conference on Financing for Development (FfD4) approaching, the world must demand that international financial institutions truly deliver on the promises of sustainability, resilience, and equity.
Dr Fahmida Khatun is executive director at the Centre for Policy Dialogue (CPD).
