Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development
IMF News, April 16, 2024
Source details
- Canonical URL
- Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development
Other formats
Bibliographic details
- Published: April 16, 2024
Overview and context
- Communiqué issued April 16, 2024, at the one hundred and eleventh meeting of G‑24 Ministers in Washington, D.C.
- Chair: Ralph Recto, Secretary of Finance, Philippines.
- Deputies’ meeting: one hundred and twenty‑third meeting on April 15, 2024.
- Special Guests: Kristalina Georgieva, Managing Director, International Monetary Fund; Ajay Banga, President, World Bank.
Global economic outlook and risks
- Findings:
- Recovery and moderate growth projected in Advanced Economies (AEs); stable growth in Emerging Markets and Developing Economies (EMDEs).
- Forecast growth for 2025 is below the twenty‑year pre‑pandemic average.
- A significant portion of the developing world is expected to be poorer by end‑2024 compared to pre‑pandemic levels.
- Inflation is easing in most regions due to reduced supply chain disruptions and tighter monetary policies, but risks remain.
- Rapid adoption of artificial intelligence and digitalization creates uncertain risks, especially for labor‑intensive sectors in EMDEs and Low‑Income Countries (LICs).
- Geopolitical tensions are disrupting supply chains and harming economic activity.
- Policy implications:
- Urgent need for renewed multilateral cooperation to support vulnerable countries and mitigate downside risks.
- Policymakers should be mindful of heightened trade‑offs: persistent core inflation could force additional monetary tightening, compounding debt, fiscal, and current account imbalances.
IMF facilities, financing, and charges
- Observations and recommendations:
- Strong demand for the IMF’s Resilience and Sustainability Facility (RSF); call to assist eligible countries to prepare strong reform packages to accelerate application and disbursement.
- Request to consider expanding the RSF beyond climate change and pandemic preparedness to include other sources of Balance of Payments (BOP) vulnerabilities during the 2024 interim review.
- Welcome increase in access limits for the Poverty Reduction and Growth Trust (PRGT); call to address long‑term sustainability of PRGT finances, including exploring options such as IMF gold sales.
- Call for willing countries with strong BOP positions to voluntarily re‑channel unused Special Drawing Rights (SDR) to needy members.
- Address impediments to rechanneling SDRs to Multilateral Development Banks (MDBs).
- Charges and surcharges:
- Call for normalization of the margin for the rate of charge on IMF lending (SDR rate) in line with existing policy; note that the margin has been set at above normal levels under the “exceptional circumstances” clause for 13 years.
- Call for review of surcharges, including elimination or substantial permanent reduction; until a decision is made, surcharges should be suspended.
- Rationale: changes would increase fiscal space and reduce debt service burden while maintaining prudent risk management for IMF finances.
- Expectation: planned discussions on surcharge policy later in the year should lead to a formal review.
IMF governance, quotas, and representation
- Key points:
- Recent equi‑proportional increase in quotas is a step toward a more quota‑based IMF and reduces reliance on borrowed resources despite no increase in lending capacity due to reduced NAB credit arrangements.
- Call on members to ensure timely implementation by expeditious approval of the quota increase through domestic processes by mid‑November 2024.
- Support for approval of a third chair for sub‑Saharan Africa and encouragement for creation of a fifth Deputy Managing Director post for EMDEs.
- Call for quota realignment reflecting evolving economic realities and stronger voice and representation for EMDEs; such realignment should not come at the expense of other EMDEs and LICs members.
- Emphasis on adhering to the June 2025 timeline for proposing options on revising the quota shareholding formula.
Debt sustainability and sovereign debt resolution
- Findings:
- Sovereign debt accumulated rapidly between 2013 and 2023 in developing countries.
- High debt service costs coupled with currency depreciation are eroding capacity to finance domestic development programs.
- Recommendations:
- Further reforms of the G20 Common Framework (CF) to ensure predictable, timely, orderly, and coordinated sovereign debt resolution.
- Encourage early and effective engagement of creditors and debtors with Credit Rating Agencies to prevent liquidity challenges from escalating into debt crises.
- Address domestic debt treatment and sovereign debt linked to state‑owned enterprises on a case‑by‑case basis.
- Design a comprehensive and responsible approach with concrete measures to help countries break the cycle of worsening debt and climate crises.
- Support for launching the Global Expert Review on Debt, Nature and Climate.
- Note: Global Sovereign Debt Roundtable (GSDR) contributed to progress in debt restructurings in Ghana and Zambia.
Multilateral Development Banks (MDBs), World Bank Group (WBG), and development finance
- Expectations and recommendations:
- Acknowledge WBG Evolution Roadmap rollout; expect improvements in speed, efficiency, and client services.
- Concern that committing 45 percent of annual financing to climate‑related projects should not come at the expense of financing basic development needs (poverty eradication and shared prosperity).
- Recommendation: focus on structuring and bankability of projects rather than fixed targets to mobilize resources.
- Call for realistic assessment of the remaining agenda, including trade‑offs, risks, and net budgetary implications.
- Financing model and instruments:
- Urge Framework of Financial Incentives (FFI) to genuinely encourage clients to address all eight global challenges endorsed by Governors in Marrakech.
- Align financing of the eight global challenges with hybrid capital, portfolio guarantee platform, and Livable Planet Fund instruments with transparent and objective allocation criteria.
- GSAP should strengthen country ownership, be demand‑driven, support all eight challenges in a balanced manner, and provide additional concessional financing and upfront grants.
- Prompt redemption of pledges by shareholders and donors is essential.
- Call on MDBs to deepen cooperation on concessional windows and thematic funds.
- IDA and IBRD:
- Call for the strongest‑ever replenishment of IDA21 to safeguard concessional financing for the most vulnerable countries.
- Call on IDA management and contributor countries to avoid hardening funding terms for the most vulnerable members.
- Note improvements in IBRD and IDA lending capacity due to balance sheet optimization, but assert new and additional resources are required to enhance financial capability.
- Call for faster progress implementing recommendations of the G20 Independent Experts Group on capital increase within WBG and across MDBs.
- Look forward to the 2025 shareholder review under the Lima Principles and hope it increases EMDE representation and voice.
Climate finance, Loss and Damage, biodiversity, and just transition
- Findings and calls:
- COP28 commitments recognized, but financing gap between commitments and needed resources remains a concern.
- Welcome operationalization progress of the Loss and Damage Fund; call on donors to fulfill commitments currently estimated at US$660 million in a timely manner.
- Call on the World Bank to expedite establishment of the fiduciary structure of the Loss and Damage Fund.
- Climate financing, including innovative tools like debt for climate swaps, should reflect common but differentiated responsibilities, respective capabilities, and a just transition.
- Call for MDBs, per the “COP28 MDBs Joint Statement”, to enhance country‑level collaboration among IFIs, channel concessional resources, unlock private finance, share knowledge, and harmonize approaches based on national climate policy frameworks and country‑led strategies.
- Emphasize that investment incentives should not make nature and biodiversity collateral for debt but instead generate new long‑term income.
- Reiterate that a just transition should ensure energy access, including all forms of energy, and affordability for developing countries.
- Acknowledge OPEC Declaration of Cooperation commitment to safeguarding oil market stability.
Domestic Resource Mobilization (DRM) and international tax cooperation
- Observations:
- DRM critical amid decreasing overseas development assistance and private market financing.
- Support for OECD‑G20‑BEPS efforts to tackle tax avoidance and improve international tax rule coherence.
- Recommendations:
- Call for simple, administrable solutions that generate substantial new fiscal revenues for EMDEs.
- Welcome UN discussions toward establishing a Framework Convention on International Tax Cooperation and urge IMF and World Bank collaboration with OECD‑led efforts.
- Note initiative of the Global Alliance Against Hunger and Poverty and inclusion of taxation and inequality in Brazil G20 Presidency agenda.
- Recommend DRM requirements in World Bank lending go beyond tax amounts to include measurable indicators on progressive taxation and reducing illicit financial flows.
Trade, multilateralism, and globalization
- Findings and calls:
- Revitalizing international cooperation is essential to address global challenges.
- Protectionist tendencies driven by geopolitical tensions, supply chain de‑risking, climate initiatives, and national security concerns hamper poverty reduction and risk trade fragmentation.
- Call to bolster multilateralism and reform the global trade system while mitigating trade fragmentation risks.
- Urge MDBs and IFIs to coordinate development agendas and support a resilient multilateral trade framework.
- Call on nations to secure trade routes and provide safe passage for movement of goods and commodities across all major trade lines.
- Emphasize enhancing collaboration between multilateral organizations and the World Trade Organization to advance broader global objectives.
Participants and representation at the meeting
- Ministers, Deputies, Observers, and Secretariat participants listed; meeting chaired by Ralph Recto with Leonardo Madcur as First Vice‑Chair and Olawale Edun as Second Vice‑Chair.
- Full list of participating Ministers, Deputies, Observers, Special Guests, G‑24 Secretariat, and IMF Secretariat for the G‑24 documented.
Intergovernmental Group of Twenty‑Four on International Monetary Affairs and Development — Communiqué, April 16, 2024.