LAGOS STATE GOVERNMENT REFUNDS 145 FORMER SUBSCRIBERS OF EGAN HOUSING ESTATE
The rich nations are like rich men who hardly want the poor to level up with them. All they offer the poor is enough to be alive to continue to provide cheap services to them. The poor nations, I believe, will never get enough liquidity from the rich to make headway. They have to find local solutions to make money and join the rich list.
In the last-but-one week of October, I was one of the people that made Washington DC, the capital of the United States, had more than the usual demand for its metro services, taxis, hailing rides and car rental services. We were from the different segments of the world: First, Second and the Third.
The massive campus of the World Bank and IMF in the heart of the District of Columbia hosted us to all manners of meetings, where all manners of issues were discussed and all manners of conclusions reached.
Aside journalists like me, whose role was to let in the world on the annual meetings, the men and women in suits at the meetings included finance ministers and secretaries, Central Bank governors, scholars, and civil society experts.
Incidentally, this year marks the 80th anniversary of the Bretton Woods System. Its Institutions have evolved over the decades, but it is a different ball game determining whether or not they are evolving fast enough to meet the rapidly changing and increasingly volatile global environment.
These winter meetings came at a time the world’s central banks have raised interest rates to their highest levels in years to tame rapid inflation, a development that has helped bring down global inflation rates. Sadly, the developing world hasn’t benefitted from shrinking inflation rates. In this beggarly part of the world, rates are still high and interest rates remain high, and higher interest rates translate to lesser affordability. Amid this, borrowing for countries is a necessity. And we are seeing an escalation in global debt crisis, which the Bretton Woods Institutions are downplaying as “short-term liquidity challenges”.
These “short-term liquidity challenges” has seen countries in the Global South defaulting on obligations. At the meetings, Civil Society Organisations (CSOs) such as the African Forum and Network on Debt and Development (AFRODAD), the Latin American Network for Economic and Social Justice (LATINDADD), the European Network on Debt and Development (Eurodad), and the Development Finance International(DFI), painted a grim picture of the situation. They highlighted how countries in the Global South are being forced to default on human rights obligations, Sustainable Development Goals (SDGs), and climate commitments due to unsustainable debt payments.
Domestic and external debt servicing, they said, is consuming 42 percent of spending across all countries, and 55 percent in Africa. This is 2.7 times the expenditure on education, 4.2 times on health, and 11 times on social protection.
According to them, recent debt relief agreements remain inadequate, with six nations that have undergone restructuring still set to spend over 20 percent of their government revenue on external debt servicing.
The CSOs argued that the solution is clear: cancel sufficient debt to allow countries return to a sustainable development path and reform the global debt architecture.
These complaints show that the Bretton Woods Institutions need to do more. The G-24, to which Nigeria belongs, identified four key reforms that would enhance the system’s effectiveness and empower the IMF and the World Bank to better serve their members. This group wants a new mechanism to support countries with sound fundamentals during liquidity crisis, more ambitious goals for concessional and non‑concessional windows, reformation of the sovereign debt resolution framework to deliver comprehensive, predictable, swift, and impactful debt relief, and the acceleration of governance and institutional reforms of the Bretton Woods Institutions to increase the voice and representation of developing nations.
In 1944, IMF and the World Bank were created for reconstruction and stability after World War II. The Bretton Woods Conference of 1944 agreed on their formation on the premise that global economic security could only be achieved through cooperation and coordination, not isolationism. The World Bank started as the International Bank for Reconstruction and Development (IBRD), to facilitate the rebuilding of war-ravaged nations and later evolved into promoting development in poorer regions of the world. The IMF was tasked with ensuring the stability of the international monetary system because currencies were devalued and gold reserves depleted after the war, and countries faced mounting pressures on their balance of payments.
From then till now, the United States and Europe have retained humongous influence over decision-making, a situation China, India, and Brazil are seriously fighting.
Their 80th anniversary has raised the question of their relevance in this age and time. It’s a moment for deep introspection and it’s high time they rose to the challenges of an era where climate change, digital disruption, inequality, and shifting geopolitical realities demand innovative solutions and a balanced-cum-responsible international cooperation.
My final take: As I returned to Houston after one week of meetings and briefings at the IMF/ World Bank Campus, the inequalities in the world and how tokenism will never address it bothered me. The developing countries require sums that can make real difference. What they currently get only help with their immediate payment needs and not to grow their economies. They need to get the resources to develop and grow.
Unfortunately, the rich nations are like rich men who hardly want the poor to level up with them. All they offer the poor is enough to be alive to continue to provide cheap services to them. The poor nations, I believe, will never get enough liquidity from the rich to make headway. They have to find local solutions to make money and join the rich list. Ask Singapore and others who have found their way out of the Third World. They did it without any reasonable outside support. So, looking up to the Bretton Woods Institutions is waiting in vain. Absolute waste of time.