“An Anchor of Stability”

The weather was unseasonably warm (with temperatures of up to 31°), but the news sent a chill down everybody’s spine: “Growth remains historically weak now and in the medium-term”, said the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, as guests from all over the world flocked to Washington in mid- April to attend the traditional Spring Meetings of the World Bank and IMF. 

Among them was OPEC Fund Director-General Abdulhamid Alkhalifa who led a delegation of the development institution to the meetings in the US capital. The agenda included talks with development partner countries and organizations as well as a series of media engagements. Using the opportunity to connect with the World Bank leadership, he met with the Vice Presidents for Eastern Europe and Central Asia, Antonella Bassani, Middle East and North Africa, Ferid Belhaj, South Asia, Martin Raiser, as well as Western and Central Africa, Ousmane Diagana. 

The OPEC Fund head said: “In a volatile and turbulent environment the multinational development banks must continue to serve as an anchor of stability and safety. As the global economy passes through choppy waters, the demand for development support is rapidly increasing. Resources are limited and increasingly scarce and we must make sure that they are shared so that those in real need are not being neglected.” 

Beyond the grim forecast that growth is set to hover around 3 percent for the next five years, the IMF’s lowest medium-term growth forecast since 1990, a second topic dominated the conversation among government representatives, policy-makers and development professionals: The growing realization that a root- and-branch reform of the international system of development finance is becoming more and more overdue. 

The USA has taken a leading role in this process: Treasury Secretary Janet Yellen said in a keynote speech in February: “The world has changed, and we need these vital institutions to change along with it.” In doing so, the multilateral development banks (MDBs) are facing a dilemma: While on the one hand they are more and more called upon to address global challenges they are on the other hand not designed for such an approach and face a serious shortfall of resources. 

For development organizations to play an enhanced and larger role, the current MDB design “is insufficient to meet the moment”, Yellen argued. “The MDBs’ core model involves countries borrowing to make specific investments aimed at addressing development constraints in their own countries. Such a model will always underinvest in addressing global challenges – since the benefits of investments in global challenges stretch far beyond the borders of the country where a given project takes place.” 

One prime example is climate change, where today a broad consensus exists that only global action can achieve much-needed progress but joint action remains difficult to deliver. Climate action is also a key concern of the OPEC Fund and Director- General Alkhalifa told the Arab news portal and newspaper The National in Washington: “It’s a challenge, but we are a development institution that feels its responsibility and we are taking those responsibilities seriously. We are happy to adress that challenge.” He also gave an interview to Bloomberg Asharq. 

The OPEC Fund’s Climate Action Plan, adopted last September, sets the target to raise climate funding to 40 percent of all new financing by 2030, while at the same time continuing to tackle energy poverty. The OPEC Fund head added: “There are millions and millions of people in low-income countries who have no access to energy or electricity.” Without energy there can be no development. 

The high demand for support was also reflected in the large number of countries the OPEC Fund delegation - which included Public Sector Assistant Director-General Fuad Albassam, General Counsel Violet Onyemenam, Senior Advisor Sami Ben Daamech, Head of Institutional and Administrative-Legal Hanno Scheuch, Public Sector Director, Asia & Pacific Jaafar Al-Mahdi, Private Sector Director for Business Development Khalid Khadduri and Private Sector Senior Investment Manager Richard Egobi - met for bilateral meetings. Talks with senior delegations from the Comoros, Philippines, Seychelles, Sri Lanka, Tanzania and Uzbekistan revolved around the intensification of cooperation through concrete public and private sector projects. 

In the same vein, a meeting with Makhtar Diop, Managing Director of the International Finance Corporation (IFC), provided the opportunity to discuss the role of the private sector. The two heads agreed that MDBs not only need to become considerably more successful in mobilizing private sector funding, but also must learn from the private sector in critical areas such as competitiveness, innovation and responsiveness.