Reform of World Bank, IMF urged

International organizations such as the International Monetary Fund and the World Bank need to be reformed, and the voices of emerging market countries and the private sector need to be heard when addressing global challenges, said panelists at a recent forum.

"There are certain fora where there's just no substitute for strengthening the voice of emerging societies," Nancy Lee, a senior policy fellow and director for sustainable development finance at the Center for Global Development, said on Monday.

She spoke during a panel discussion, "How to Strengthen Cooperation in a Fragmenting World", co-hosted by the center, the Bretton Woods Committee, or BWC, a nonprofit organization, and the International Finance Forum, or IFF.

It was one of the subforums of this week's joint 2024 Spring Meetings of the World Bank Group and the IMF, held in Washington, DC.

Lee said the multilateral economic and financial system has sustained shocks. She said the strength of any multilateral alliance depends on what holds the participants together. It also depends on whether the members of the alliance are satisfied with sharing the burden, she said.

"Never before, I think you can say in human history, has the threat been global in nature, and I'm talking about climate change and about pandemic disease. And we certainly see unhappiness on burden-sharing," Lee said.

"The major emitters can't agree on how the burden should be shared, and certainly those excluded from decision-making in emerging societies aren't happy with the role that they're playing and shaping," she said. "And then we have gathering conflicts."

Vera Songwe, chair and founder of the Liquidity and Sustainability Facility, suggested "bringing the private sector into the room".

"Because one of the things we are clearly seeing is that today, a lot of the discussions we are having about development are about how we get private sector resources. But we don't have the private sector in the room," said Songwe.

Songwe said China's clean energy and photovoltaic industries have developed rapidly and lead the world with the active participation of private enterprises, making great contributions to the global response to climate change.

"We still rave about the fact that solar panel prices crashed, and so everybody can afford a good solar panel at home," said Songwe.

On claims about China's "overproduction" of clean energy products, Zhu Xian, executive vice-president of the IFF and former vice-president of the World Bank, suggested that "someone third-party, maybe academic people, do a really good study of that".

"Like new products emerging, what would be legitimate state support?"

He suggested doing something beyond complaining that Chinese solar panels, wind power and electric vehicles "are so cheap because of heavy subsidies".

Lee said the improvement of green production capacity should be treated differently than the overcapacity of traditional industries.

Solving issues together

Caroline Atkinson, former deputy national security adviser for international economics during the Barack Obama administration, said that governments working together could solve global problems such as climate issues and geopolitical conflicts.

"So, we need multilateral and global institutions, but on the way to reaching global solutions, it can be useful to have regional collaboration," Atkinson said. "The question is the regional collaboration — is that integration and good competition, or is it more building a wall against the rest of the world? And that's a big question."

A new report published by BWC's Multilateral Reform Working Group titled Strengthening the Bretton Woods Institutions to Meet 21st-Century Global Challenges was launched at the event.

The report said the World Bank and the IMF — given their global membership, shareholding model and weighted voting structures — are best positioned to fill the global leadership role to make progress.

The report raised questions such as how the organizations can be strengthened with respect to governance, resources and expertise, for the purpose of effectively tackling global common challenges.

Unlike the cooperative spirit of Bretton Woods, where nations rebuilt the international economic order together, today's environment lacks the same level of coordinated action, the panelists said.