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With one-fifth of the world’s population living in the 25 countries at highest risk of debt distress, this week’s edition of Aftershocks looks at what the IMF and World Bank annual meetings could mean for the multitude of crises the world faces.

Top News: All pain, no gains: “Very painful” economic days are ahead, predicts the IMF, with global growth shrinking to 2.7% in 2023. That’s down from 3.2% this year and 6% last year. This is the weakest growth since 2001, except for the global financial crisis and the acute phase of the COVID-19 pandemic. Experts are warning that “the worst is yet to come.” There’s a 25% chance that annual growth will slump to below 2%, which has only happened in five of the last 50 years. 👀 Hot potato: This week, the UNDP pitched an urgent plan to restructure the debt of 54 countries at the highest risk of debt distress and cautioned against doing “too little too late.” Negotiations would revive the long-stalled G20 Common Framework. Why now? The “brutal” cost of inaction in those countries – which are home to more than half of the world’s population – should be reason enough, but there’s also a profit motive: bonds in many of the countries are trading at steep discounts, which should make private creditors more open to negotiation – if major creditor governments give financial assurances. Unconvinced activists crashed a debt restructuring panel at IMF headquarters, calling for full debt forgiveness. Rise to the occasion? Major shareholders, including all G7 members, are pressuring the World Bank for reforms that would help vulnerable countries meet global challenges, including climate change. World Bank President David Malpass, who last month created a stir after sidestepping a question about whether man-made greenhouse gases were contributing to climate change (he later acknowledged that they were), emphasised that the World Bank needed to work quickly to better enable lower-income countries to address climate challenges. Meanwhile, the G24 endorsed MDB reforms that could release up to $1 trillion in additional financing, and which S&P Global Ratings says wouldn’t trigger a credit ratings downgrade. Your move, G20 leaders and MDB management. A gift from us to you: This week we are launching data.one.org, a new platform with real time data on the implications of global crises on African countries and insights on how African countries are responding. We’re channelling our anger against injustice into smart analysis to help you better understand the world and ultimately, change it. Visit data.one.org now and hit the bookmark button. Debtor’s dilemma: The World Bank (un)helpfully suggested that African leaders reorient government spending towards agriculture, education, and healthcare amidst dire economic outlooks. Sound advice, if they had the money. But as the World Bank itself points out, debt has reached nearly 60% of GDP in sub-Saharan Africa and governments are tightening their belts in the face of multiple crises. Debt-servicing will likely cost African countries $64 billion this year. Ironically, given the advice, World Bank and IMF support for those countries appears to be declining. But it’s as much a demand as a supply issue, with experts suggesting that lending terms may be curbing demand for IMF and World Bank loans. Deteriorating health: In fact, health spending in almost half of lower-income countries has suffered despite a global health emergency. That’s partly due to cuts in rich countries’ development budgets, according to an analysis of 161 countries. Just under half of the countries cut welfare spending, with another $7.8 trillion in public funding cuts forecast as debt levels rise. If only something could be done to support vulnerable countries’ efforts to protect their citizens from the polycrisis they didn’t create, like say, rechannelling the long-promised $100 billion in IMF Special Drawing Rights. ¯\_(ツ)_/¯ SDRs IOUs: Speaking of Special Drawing Rights, 140 civil society organisations have called for a new $650 billion SDRs issuance to help vulnerable countries deal with the food and energy crises. IMF representatives have said it’s unlikely to occur given continued failures to rechannel existing SDRs. So far, leaders have committed to rechannel $75 billion SDRs, but delivery lags far behind. However, the IMF did launch its Resilience and Sustainability Trust to allow countries to channel their SDR commitments. So for countries that haven’t yet stepped up (Denmark, Finland, Ireland, Norway, Portugal, Sweden) there’s nothing stopping them. 🚦 Admiring the problem: Faced with a looming famine in the Horn of Africa, 1 in 10 people globally suffering from hunger, and woefully underfunded relief efforts, G20 finance and agriculture ministers this week took the bold step of tasking the World Bank and FAO with “mapping policy responses to address the hunger crisis.” The outcome will be shared at the Spring Meetings in April 2023, demonstrating an (un)inspiring level of urgency during a crisis in which one person is dying of hunger every four seconds. Esteemed company: The UN General Assembly overwhelmingly voted in favour of a resolution condemning Russia’s actions in Ukraine. Just five countries (Belarus, Nicaragua, North Korea, Syria, and Russia) voted against it, with 143 countries voting to condemn Russia and 35 countries abstaining, including 19 African countries – many of which depend on Russia for weapons. Five African countries (Angola, Guinea-Bissau, Madagascar, Morocco, and Senegal) that did not support the 2 March resolution condemning Russia’s invasion of Ukraine voted for this week’s resolution. From the ONE Team: Explore data.one.org, our new online platform that has the most up-to-date data and analysis on the big issues impacting Africa. Catch up on ONE Policy Director David McNair’s daily breakdown of the annual meetings, including the key topics and what’s happened so far. Journalist and ONE consultant Lekan Otufodunrin looks at Nigeria’s role in achieving global climate change solutions. ONE’s Jobs Now Africa campaign is calling for the creation of 15 million new jobs each year until 2025. The Numbers: 5 years: the time often needed to recover from a disorderly debt default. 5%: the portion of newly issued SDRs given to low-income countries during the pandemic, versus 61% to advanced economies. 27%: the share of ODA likely to be spent on in-donor refugee costs this year, thanks in large part to the war in Ukraine.

QUOTE OF THE WEEK "Africa was neither responsible for the pandemic nor the war in Ukraine. The first is undoing years of human development gains. The second has unleashed a wave of food and energy inflation." – Edward Luce, US National Editor for the Financial Times

What you should read, watch & listen to: The World Bank must be reformed if the US and its allies are to regain the trust of developing countries. (Project Syndicate) Large study provides powerful evidence of long COVID’s lasting impact. (Washington Post) Trillions, not billions, are needed to address the world’s crises. (World Bank Live) “We are not even five minutes to midnight on climate change”: Germany’s melting glacier and what it portends. (Ben Phillips) Dire climate impacts distract from even more dire warnings. (Bloomberg)

A look ahead: Today through 16 October: The IMF-World Bank Annual Meetings continue in Washington DC, where leaders are discussing food and energy security issues as well as development financing. 17-21 October: The World Food Global Youth Forum flagship event will be held in Rome, with the theme “Healthy Diets. Healthy Planet.” 18-20 October: The 2022 Norman E. Borlaug International Dialogue on Feeding a Fragile World will bring together experts to discuss how to overcome the current food security crisis. 18-20 October: The 3rd Finance in Common Summit will bring Public Development Banks together in Abidjan to focus on a Green and Just transition. 18-21 October: UN Committee of Experts on International Cooperation in Tax Matters will hold its 25th session in Geneva, Switzerland.

The ONE Campaign’s Africa COVID-19 Tracker brings together the key data points on how COVID-19 is impacting Africa. Check it out HERE.

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