Spring Conference in Washington: Multiple crises threaten the world economy

Pandemic and war are putting massive pressure on the global economy. At their spring meeting, the IMF and the World Bank – and the G20 finance ministers – are discussing how this pressure can be reduced.

“There are weeks that shape decades – and we are experiencing them right now,” said German Finance Minister Christian Lindner in Washington on the sidelines of the spring meeting of the International Monetary Fund (IMF), World Bank and G20 finance ministers. A moment with long-term effects, a crisis after a crisis – that’s what IMF boss Kristalina Georgieva calls it.

The pandemic with its economic crisis is not over – and now there is also the war in Ukraine, which is driving up prices for energy and above all food so high worldwide that there is a risk of famine in many developing countries. Add to that inflation and rising interest rates, which have already pushed 60 percent of poorer countries to the brink of collapse or beyond.

Lindner repeatedly emphasizes that there is a threat of a global debt crisis, that something must be done immediately – not only when the crisis is there. The FDP politician appeals to China, the largest creditor in poorer countries, to take the pressure off. But ultimately everyone would have to work together with the IMF and the World Bank to find solutions, says World Bank President David Malpass.

aid to poor countries

According to Lindner, Germany pledges 100 million euros for interest rate subsidies and gives another six billion in loans for a fund that supports poorer countries. But the aid must go further and be long-term and sustainable, warns Malpass. One is to allow more trade; but steps to open the markets are also very important.

In addition to all the financial programs to support ailing economies, it is also important not to forget the people. If states want to be resilient in the long term, the population must be able to create economic growth: “For the people to compensate for the loss of education during the pandemic and to train the working population for the digital age,” explains the World Bank boss.

reconstruction of Ukraine

In addition to looking at global economic development, both the World Bank and the IMF must help Ukraine directly. Even excluding the cost of post-war reconstruction, the IMF is currently estimating a monthly financial requirement of five billion dollars.

IMF boss Georgieva then says something like “We can do it,” only a little more poetically: “Even though storms are raging over us, we’re working together to bring everyone safely to shore.” Above all, this requires money. But there is still something of that. The fund still has 700 billion dollars available to overcome this crisis after a crisis after a crisis.