It was a geopolitical balancing act on the tightrope of multilateral development architecture and against the headwinds of global compassion fatigue. The 2025 Annual Meetings of the International Monetary Fund (IMF) and World Bank Group (WBG), much like the Spring Meetings earlier in the year, underscored the fragile state of global financial governance. While the one-week event offered senior officials from finance ministries and central banks important policy guidance and some operational refinements to enhance institutional responsiveness, they fell short of delivering the substantial financing and structural reforms many Global South countries had sought. Geopolitical tensions, particularly between the US and China, continue to constrain the Bretton Woods institutions’ ability to respond to bleak forecasts on climate, debt, and sustainable development. In line with projections made in a previous text published by the Montréal Council on Foreign Relations, the meetings confirmed an emerging trend towards transactional multilateralism—a policy approach in which states approach institutions as arenas for short-term bargaining rather than shared, rules-based frameworks serving collective interests. If this trend continues, it risks replacing enduring commitments with quid-pro-quo deals, thereby undermining both conceptual clarity and political legitimacy.
Jobs as a development lever
The Development Committee (DC)—a ministerial-level WBG/IMF forum tasked with building intergovernmental consensus and advising both institutions on critical development priorities—designated job creation as its principal development lever. It recommended that all projects and programmes ‘have a clear line of sight to employment,’ framing jobs as the metric through which every financing operation would be assessed. This was communicated as a shift from funding isolated projects towards supporting economic ecosystems to create employment across entire sectors. While ambitious, the framing disregarded a successful legacy of negotiated Country Partnership Strategies, which had already aimed at transcending single-project funding and embedding operations into strategic programmes with clear policies and monitorable outcome matrices.
Against the backdrop of the current polycrisis, this jobs-centred approach risks being viewed—in retrospect—as timid and insufficient. The crises facing the global economy are overlapping, interconnected, and self-reinforcing, defying solutions based on single-policy benchmarks. WBG President Ajay Banga’s assertion that ‘jobs are not a side effect, but the outcome of development done right’ highlights the critical importance of employment-focused development—but an exclusive emphasis on jobs risks partial solutions. The countries most affected are those least responsible for global crises and with the fewest resources to mitigate them, reinforcing calls from the Global South for more financing and a stronger voice in decision-making. Already, COP30, to be hosted by Brazil over the next few weeks, is urged to link climate justice with reparations for historical crimes.
Strategic silence on climate priorities
Climate finance surfaced as a contentious point at a critical point in time just prior to the Annual Meetings. Official communications from both institutions had sought to placate the US administration, which has challenged climate initiatives as a development priority. On the 13 pages of the DC report, ‘climate’ was mentioned only once, compared with 126 references to ‘jobs’. Yet, according to Reuters, 19 of 25 World Bank Executive Directors, representing 120 countries, reaffirmed a commitment to allocate 45 per cent of annual financing to climate-related projects aligned with the Paris Agreement. The US, supported by the oil-exporters Russia, Kuwait, and Saudi Arabia, declined to endorse this, reflecting domestic political priorities and broader scepticism towards multilateral climate action.
The World Bank noted that 48 per cent of projects in the previous fiscal year had included climate co-benefits, but this falls short of previous results (62 per cent in 2020) and the ambition expressed in reports such as Closing the Gap, which emphasised that global climate finance was essential for vulnerable low-income countries facing fragility and conflict. Similarly, the IMF’s updated World Economic Outlook focused narrowly on macro-fiscal policies, with only peripheral attention to the implications of rapid AI adoption and the climate–finance nexus. The DC report masked the deepening fissures with a document that balanced the development priorities of Americans (private-sector reliance, technological openness, and debt distress), other Western countries (emissions, ecosystems, domestic resource mobilisation, and social protection), and Chinese (foundational infrastructure and corridor projects).
Postponement of systemic challenges
Several systemic challenges remained unresolved. Expectations of major capital increases, significant Special Drawing Rights reallocations, or collective debt relief mechanisms were unmet. Despite calls for robust sovereign-debt workouts, no operational mechanism emerged to address urgent challenges of growing debt distress also affecting high-income countries. The combination of declining aid allocations and selective development mandates risks reducing multilateralism to a series of technical transactions, thereby extracting Global South priorities from the global governance architecture.
The 2025 Annual Meetings reaffirmed the persistence of multilateralism—but, increasingly, in a transactional form. The IMF and World Bank remain indispensable conveners of analysis, norms, and finance, yet large-scale, coordinated action now depends on alignment among shareholders outside the formal Annual Meetings framework. Balancing technical capacity with political legitimacy will become a delicate priority of development officials. The institutions must reconcile the Global South’s demand for greater voice and less punitive conditionality with advanced economies’ own priorities of fiscal consolidation and resultant insistence on accountability, all while navigating the politicisation of technical issues driven by great-power competition.
Implications for global economic governance
Looking forward, the future effectiveness of the Bretton Woods institutions hinges on their ability to mediate between competing strategic visions while maintaining credibility with the Global South. Without such balance, they risk becoming technocratic lenders rather than instruments of collective global governance, undermining their original mission of promoting high employment, equitable development, and sustainable growth. The 2025 Annual Meetings crystallised a subtle but consequential shift: the US now seeks to discipline these institutions under fiscal and strategic restraint, while other shareholders aim at preserving a diversified development mandate. The result is a hybrid compromise—fiscal orthodoxy wrapped around expanded development goals. Whether this balance can endure will define the trajectory of global economic governance into 2026 and beyond.
Jan-Peter Olters
powered by Borlabs Cookie