TWN Info Service on UN Sustainable Development (Nov25/04)
19 November 2025
Third World Network

Reflections on the IMF/World Bank meetings (2025): Debt, surveillance, and the mirage of inclusive growth

by Maria Syed

The 2025 International Monetary Fund (IMF)/World Bank annual meetings in October again attempted to strike a balance between discussions of reform and the organizations’ traditional policies. Officials spoke about “green transitions” and “gender-responsive macro-policy”. However, behind this progressive language, the primary focus remained on tight budgets, debt repayment, and private-sector growth. These have been the primary ideas guiding the Bretton Woods institutions (BWIs) since 1944.

The IMF’s World Economic Outlook report and Global Financial Stability Report stressed the need to rebuild fiscal buffers, strengthen institutions, and maintain credible governance. This comes amid a volatile global economy with persistent trade imbalances and high interest rates. Emerging and frontier markets, facing debt and revenue issues, were key. The BWIs promoted flexible exchange rates, deeper bond markets, and Basel III standards to stabilize markets and reduce risk. Reports also highlighted social and green investments, such as climate finance, to support growth and resilience.

Declining aid flows, the need to optimize the balance sheets of bilateral institutions and multilateral development banks, and the complexities of debt-for-development swaps remain major problems for the Global South. These swaps could help channel resources towards development, but face significant challenges. Another critical point was the acceptance of the political economy as a topic within the discussion.

1. Structural pillars and “job creation” at the World Bank

At the bigger level, both the IMF and the World Bank rely on three main ideas: keeping economies stable with careful budgets; opening markets through private business; and reducing poverty by promoting more equitable growth.

The first two pillars are material, the third is rhetorical. The World Bank’s “Jobs and Economic Transformation” initiative typifies this duality. It promises inclusive employment but often relies on deregulation and investor incentives that generate precarious, low-wage labour rather than secure jobs. Similarly, its “Creating Markets” agenda channels development finance into de-risking private investment instead of strengthening public capacity.

In debates and high-level discussions, public spending on care services and infrastructure, which has the potential for strong fiscal multipliers, has been absent from the agenda, even when discussing output multipliers, inflation targeting, and the need for balance-of-payments stability. These challenges call for urgent and coordinated action through a significant increase in public spending on two key fronts: a universal care system that includes health and social care for the elderly and disabled, education, and childcare; and the green economy, which encompasses renewable energy, public transport, energy-efficient infrastructure, sustainable agriculture, reforestation, recycling, and repair.

During the Global Financial Crisis and the COVID-19 pandemic, the IMF effectively supported countercyclical fiscal measures, including public investment, social spending, and the green transition, which were crucial for stabilizing economies in the long term. However, these actions also depleted fiscal buffers and heightened debt vulnerabilities. Public spending on care services and infrastructure generates strong fiscal multipliers, raising GDP by about 11 percent and employment by 6 percent after five years, thereby expanding fiscal space as higher national income increases revenues. Such spending should be viewed as public investment in social infrastructure, rather than current expenditure, and requires long-term, strategic financing that is robust and sustained to drive long-term, equitable growth.

As the Fund expanded its approach to encompass multiple fiscal priorities, it encountered increasing trade-offs and analytical complexity. New tools, such as realism checks and liquidity risk assessments, have improved policy realism; however, gaps persist in estimating fiscal multipliers, assessing distributional impacts, and strengthening medium-term budgetary frameworks.

At the country level, IMF advice often recognized adjustment trade-offs but varied in depth and quality:
· In advanced economies, the Fund expanded its focus to medium- and long-term fiscal challenges, though consistency in debt coverage remained uneven.
· In developing economies, attention centred on achieving the Sustainable Development Goals (SDGs), with calls for more explicit fiscal guidance, stronger use of analytical tools, and more proactive technical assistance.

In debt management, the IMF’s advice is increasingly considering financing structures and creditor composition, but could better link debt sustainability assessments to long-term development goals.

Looking forward, the BWIs require a more selective and targeted approach, striking a balance between fiscal sustainability, growth, and inclusion, while providing clearer, country-specific guidance on financing needs and structural fiscal priorities. To achieve this, the BWIs could develop tailored country strategies that align debt management policies with the SDGs, ensuring an integrated approach that considers local contexts. Secondly, they could enhance engagement with local stakeholders, including governments, civil society, and the private sector, to gather insights on practical challenges and effective policy solutions. Additionally, adaptive fiscal frameworks could be promoted that incorporate flexibility to prioritize transparency and accountability in funding initiatives, with regular audits and publicly accessible impact assessments to ensure financial integrity. Lastly, they can foster capacity-building programmes that empower countries to independently manage debt and implement structural reforms, focusing on knowledge transfer and technical assistance. By committing to these steps, BWIs can provide robust and actionable guidance that resonates with the unique needs of individual countries.

At the Civil Society Policy Forum during the IMF/WB annual meetings, the session on “Scrutinizing the IMF role on debt issues” discussed debt in the Global South, particularly in the Middle East and North Africa (MENA) region, which is shaped by both hidden domestic liabilities and external debt, which constrain fiscal space and limit social spending, resulting in significant redistributional effects. External debt pressures underscore the importance of independent institutions, such as budgetary councils, in providing transparent oversight, guiding IMF conditionalities, and supporting countries in negotiating equitable solutions. Current debt restructuring mechanisms remain non-systemic and heavily influenced by creditor leverage, raising concerns about the effectiveness of interventions in reducing debt burdens without undermining social and development priorities. While the IMF’s three-pillar approach and Stand-By Arrangement (SBA) programmes aim to address liquidity gaps, assess fiscal sustainability, and guide structural reforms, uneven implementation and diagnostic risks may affect future debt costs. Addressing immediate financing needs while ensuring long-term stability requires development-oriented policies that are integrated with human rights, gender equity, and social protection, alongside strategies to reduce interest burdens and support growth-oriented lending. Establishing a UN-led statutory debt workout mechanism, embedding transparency, accountability, and good-faith negotiations, and strengthening creditor and international financial institution (IFI) accountability are essential to safeguard sovereignty, promote equitable recovery, and align debt relief with human and development outcomes.

The 2025 IMF/World Bank meetings underscored the institutions’ rhetorical evolution, but structural inertia remains. Debt sustainability remains the central creed, austerity its moral code. Climate, gender, and inclusion are welcome new language, but they orbit around the same fiscal sun. The IMF should conduct ex-ante and ex-post assessments of the distributional, gender, and climate impacts of its policy advice, with the results of these assessments informing the evaluation of trade-offs between macroeconomic policy options and alternative pathways in Article IV reports.

2. Surveillance and the limits of “macro-criticality”

The IMF’s Comprehensive Surveillance Review was presented as a modernization of oversight, expanding its scope to include climate, inequality, and gender issues. However, problems are addressed only when they pose a threat to macroeconomic stability. “Macro-criticality” is a term introduced to recognize the intersectional matters of political and economic development issues, according to which gender and economic inequalities should be prioritized. However, it remains an unclear standard because of the focus on “fiscal sustainability, spending adequacy, and spending efficiency”. This reveals a deep bias: social and environmental crises matter only if they disrupt financial flows. The balance of payments, output stabilization, and pro-growth spending take precedence in defining growth and GDP. Gender inequality is viewed as a drag on GDP rather than an injustice; climate risks are treated as fiscal contingencies rather than existential threats. The result is ideology cloaked in prudent language.

The Fund’s surveillance mechanisms, such as Article IV consultations and Debt Sustainability Analyses, still focus on fiscal indicators over welfare outcomes. Adding climate and gender data “greens” its image without changing the macroeconomic logic. To address this, a more inclusive approach should be adopted. Integrating welfare metrics into assessments could better reflect social impacts. Moreover, a participatory review process would democratize these consultations, ensuring that diverse voices contribute to shaping policy advice. The surveillance framework increases monitoring but does not democratize it. It should also consider how austerity affects currency fluctuations and the broader impacts on debt-stressed, climate-vulnerable countries.

Many Fund discussions focused on countercyclical policies and investing in public infrastructure. Yet, austerity remains paradoxical. Research shows 60% of Article IV reports mention the social impacts of IMF policies. Still, 94% recommend removing universal social protections, and none suggest ways to reduce inequality.

3. The debt-austerity trap

The IMF’s renewed focus on debt sustainability has reignited debate over its relationship with austerity. Despite acknowledging “mounting debt vulnerabilities”, the Fund’s proposed remedies of fiscal tightening, privatization, and structural reform remain unchanged. Reports by the Bretton Woods Project indicate that between 2010 and 2024, over 80% of IMF programmes included public wage bill cuts or the removal of subsidies. These measures often hit marginalized individuals the hardest, deepening inequality even as the institution claims to promote inclusion.

The 2025 annual meetings reiterated the “threefold approach” for economies under strain: domestic resource mobilization, international financing, and private-sector participation. However, none of these addresses the fundamental contradiction: while creditors remain prioritized and debt repayment is enforced, debtor nations bear the social costs of the repayment. This reveals an inherent conflict as “debt sustainability” becomes an end in itself, prioritizing debt repayment over human development and well-being. To offer a more balanced framework, some policy researchers suggest shifting towards debt relief models that prioritize social investment and human development. Approaches such as Human Development Index–adjusted debt service or the implementation of a sovereign debt restructuring mechanism aim to align debt obligations with broader humanitarian goals. The integration of a Disaster-Linked Debt Instrument can also provide relief to nations hit by unforeseen events, ensuring that economic stability does not undermine progress in social sectors.

Discussions about the Fiscal Monitor, World Economic Outlook, and Global Financial Stability Report emphasized the importance of efficient public spending, particularly in education and healthcare. However, this focus conflicts with policies that cut social protection, freeze wages, and remove targeted subsidies. For instance, under the IMF’s Extended Fund Facility (EFF) for Argentina, reduced energy subsidies left 58% of Argentine households facing energy deprivation. Such actions, meant to target aid more, instead contract the public sector, which contradicts the goal of boosting productive capacity.

4. Climate and impact evaluation: from rhetoric to metrics

The meetings heavily promoted “green, resilient, and inclusive growth”. Both the IMF and the World Bank highlighted climate finance and carbon-pricing frameworks. However, impact assessments remain selective and instrumental. The critique emphasizes that the IMF’s approach should incorporate stricter integrity standards, limit the use of offsets, and establish highly enforceable carbon markets to avoid the pitfalls of ineffective and potentially harmful carbon markets.

The World Bank’s Impact Evaluation Lab now tracks how projects meet climate targets, measuring factors such as the installation of megawatts of renewables. Yet, it focuses on project-level results rather than broader transformation. Similarly, IMF pilot programmes on climate risk are stress tests aimed at investors, not communities.

The institutions rarely ask if fiscal austerity harms climate resilience, though evidence suggests it does. Budget cuts to health, energy, and infrastructure limit the ability to adapt. Without seeing climate policy as a social contract, impact evaluations risk becoming self-legitimating exercises.

5. Gender equality: progress and performativity

Against this backdrop, gender equality featured prominently in the joint communiqués from the annual meetings, presented as both a moral imperative and a growth strategy. The IMF’s Gender Strategy now recommends integrating gender analysis into macroeconomic policy surveillance, which is considered “macro-critical”. The World Bank, meanwhile, promotes “gender-smart investments” and female entrepreneurship programmes under its Human Capital Project, which was presented alongside the 30 million job creation strategies in most of the discussions.

At the Civil Society Policy Forum, Dr. Tara Povey of the Bretton Woods Project discussed 14 years of austerity and the shrinking role of the state. Despite increased discussion of social and gender inequalities, policy responses have not adequately addressed these challenges. Nabil Abdo from Oxfam reported that 187 Article IV reviews of 125 countries resulted in 1,048 tax recommendations, with 53% favouring regressive taxes, such as value-added tax (VAT) or goods and services tax (GST). Carbon taxes are rising, but poor-quality offsets harm the integrity and delay the phase-out of fossil fuels.

While symbolically significant, the gender agenda risks becoming performative, particularly as austerity policies often contradict the goals of gender equality. Wage freezes in the public sector and subsidy cuts to basic goods disproportionately harm women and marginalized groups. As the Bretton Woods Project argues, unless gender is truly mainstreamed into fiscal design, tax, spending, and debt, these gender initiatives cannot deliver on their long-term promises. The contradiction between rhetoric and practice undermines the effectiveness of the agenda. To promote genuine integration, practical measures such as gender budgeting, which involves allocating resources based on gender needs, and comprehensive impact assessments that evaluate the impact of fiscal policies on gender equality must be implemented. These measures would provide a framework for systematically addressing gender disparities and ensuring that budgetary policies support equality objectives.