Welcome to this week’s Trade Policy and Law Update which highlights developments, and issues arising in trade law and policy that are relevant to African countries.
Afronomicslaw African Sovereign Debt Justice Network (ASJDN) has led these calls for IMF’s governance reforms in its thought provoking piece, which makes certain important points. First, that IMF undertake reforms in its governance structure, quotas and voting system to undo the colonial origins and design of the institution. Second, that the stalled implementation, opaqueness and low participation of countries shouldering heavy debt in the G20 Common Framework for Debt Treatments demonstrates the need for definitive and long term solutions for the sovereign debt crisis African countries are facing.
This updates focuses on the ongoing International Monetary Fund (IMF) and World Bank Group (WBG) meetings, currently taking place in Washington DC in USA. These meetings happened against a backdrop of economic challenges that are being faced by Global South counties like those in Africa. These challenges range from food insecurity, inflationary pressures, and slow post–Covid-19 economic recovery. And also many countries are facing debt crises, which many analysts attribute to poor IMF’s fiscal policies- some of which need urgent reform. Indeed, director for the African Department warned of a “dark period” for the continent amid global economic woes and chastised donor nations for being “shortsighted,” adding that a failure to support lower-income countries in trouble now will have ripple effects into the future. This update spotlights some the critical perspectives from the Global south in relation to reforming the Multilateral Financial Framework.
On representation, a working paper by the Global Development Policy Center has illustrated how the needs of climate vulnerable countries and developing countries more broadly are not prioritized within the IMF’s current governance framework and quota distribution, with the IMF concentrating formal decision-making power in the hands of a handful of wealthy countries.
In terms of what debt and climate, a recent research paper indicated that African stands to as a result, the debt-burden in African countries could increase 2.4 times due to climate change induced shocks.
But even as these deliberations go on, there have been some interesting developments initiated by the African led institutions that can be explored alongside the calls for reforms. These include the proposal for creation of a borrowers club that are based in African to create a borrowers club and also to address what matters most to debt management in Africa. Stay tuned for more analysis especially on whether this year’s IMF and World Bank Group’s meetings will have outcomes that address the much needed reforms in the global debt infrastructure.