The International Monetary Fund and World Bank, on Thursday, announced their intention to intensify their institutions’ collaboration in the field of climate change, debt, and digital transition. The two institutions felt that the global economy faces a challenging time.

On the eve of the G20 leadership summit under India’s Presidency, Kristalina Georgieva, Managing Director of the International Monetary Fund, and Ajay Banga, President of the World Bank, in a joint statement said: “The world confronts significant economic challenges, the existential threat of climate change as well as a digital transition, all in the context of more frequent shocks, high debt levels, limited policy space in many countries and rising geopolitical tensions.”  Both Georgieva and Banga are scheduled to participate in the summit taking place on September 9 and 10.

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Further, they called for well-designed and appropriately sequenced policies, which are critical to help accelerate growth, alleviate policy trade-offs, and support the green and digital transitions. “The Bretton Woods institutions have a critical role to play to help member countries address the challenges and leverage the opportunities, working closely together and with partners,” they added.

The statement said the world confronts major transformational challenges and more frequent shocks at a time of rising economic and geopolitical tensions. Growth in the world economy has slowed, with the medium-term outlook at its weakest in over three decades. Progress in poverty reduction has come to a halt. Conflict and fragility are on the rise. The world is facing geo-economic fragmentation, extreme natural disasters exacerbated by climate change, and increasing levels of public debt. Rapid digitalisation and technological transformations create new challenges, but also opportunities. “With well-designed and appropriately sequenced reforms, the digital and green transitions can bring tremendous economic, social and environmental gains, and add to welfare and prosperity,” the statement said.

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It recalled that the Bretton Woods institutions were established in 1944 (after the Second World War) to help rebuild a world economy devastated by global depression and war. As the world economy has changed over the past 80 years, the Bank and the Fund have continued to adapt and work closely together to serve their members’ needs. “We are committed to enhancing our collaboration to deliver tangible benefits for people, businesses, and institutions of our member countries,” it said.

Both institutions highlighted their respective mandates and expertise. On the one hand, the World Bank has diverse skills and experience, including on sustainable growth and structural transformation, and its significant footprint in client countries, while the Fund has the capabilities to support macroeconomic and financial stability, and promote economic conditions conducive to growth and sustainability. “We will coordinate closely our global, regional, and country-level engagements to ensure that our resources are deployed efficiently and effectively, driven by a focus on results for our members,” the statement said.

Both institutions have agreed to work with shareholders and partners to mobilise the substantial resources needed to meet the complex challenges the world faces today. This requires both domestic and external resources. To this end, we will increase our support to help countries build a strong tax policy and administration, and fiscal institutions that deliver efficient public spending and sound debt and public financial management, along with our ongoing work to support the development of strong domestic financial markets.

“The world can, and must, come together to address global challenges. The IMF and World Bank are committed to help advance this common effort,” concluded the statement.