Development Banks Should Reform Their Lending Practices

The International Monetary Fund (IMF) and the World Bank share a common goal of raising living standards in their member countries. This week, the two international institutions will convene in Washington DC (through October 16) for their annual meeting. The strength of the US dollar will be a key talking point. By adjusting their lending practices, these institutions have a unique opportunity to relieve suffering in the world’s poorest countries.By Alexander Kozul-Wright and Ruurd BrouwerGENEVA, Oct 11 2022 (IPS) In the last week of September, emerging market (EM) bond fund outflows hit $4.2 billion, according to JP Morgan, bringing this year’s total to a record $70 billion. The exodus, set off by a rising U.S. dollar, is heaping pressure on low-income countries. The greenback’s rise has been fuelled by interest-rate hikes by the Federal Reserve. Since March, the Fed has raised rates by three percentage points, prompting global investors to move their funds into U.S. financial assets and away from (riskier) EM investments. While economists continue to wrangle over their U.S. growth forecasts, this ‘flight to quality’ has sent financial shockwaves across the developing world, already straining under elevated costs for food and fuel – typically priced in U.S. dollars. Moreover, attempts by EM policy makers to stem the dollar’s rise have largely failed. Over the course of this year, central banks around the world have drained their U.S. dollar reserves at the fas...
Source: IPS Inter Press Service - Health - Category: International Medicine & Public Health Authors: Tags: Development & Aid Economy & Trade Financial Crisis Global Headlines Health Inequity Poverty & SDGs TerraViva United Nations IPS UN Bureau Source Type: news