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Synopsis: In light of the latest issues of the pandemic, economic recovery etc., how Bretton Woods can remain relevant.
Time and again, Bretton Woods institutions (IMF and World Bank) have been accused of bias towards the West, more specifically with regard to the USA.
Recently, the ‘Fund-Bank’ annual meeting discussed the issues plaguing the whole world as they affect rich and poor countries alike, though the degree of impact may differ.
What are the recent challenges in front of Bretton Woods institutions?
The controversy over the World Bank’s Doing Business report, whereby it is alleged that senior leadership at the bank manipulated the index’s data in response to pressure from China and Saudi Arabia among others, casted further mistrust on these institutions.
|Read more: The end of Ease of Doing Business Rankings: Reasons and implications – Explained, pointwise|
Global economic recovery- The latest edition of the IMF’s ‘World Economic Outlook‘ states, that the pandemic has widened the existing economic gap between rich and poor nations.
This is visible from IMF’s ‘Fiscal Monitor’. It says that while advanced economies used supportive fiscal policy to kick-start growth and employment, the pandemic’s impact has squeezed the fiscal space for poor nations. This will endanger their growth prospects for some time to come. The uneven pace of vaccination across economies worsens the malady.
The visible effects of climate change and the US Federal Reserve’s monetary-policy’s proposed hawkish (higher interest rates) stand has magnified global economic risks.
How Bretton Woods duo can make meaningful contributions?
It needs to provide higher volumes of concessional funding at an accelerated rate, either directly or by precipitating financial flows from other agencies.
By minimizing the influence of America’s domestic politics or by dropping their past ideological commitments and practice true multilateralism.
Source: This post is based on the article “Three dark clouds over the Bretton Woods twins” published in “Livemint” on 18th October 2021.