Reforming global finance to improve lives

The 2023 Spring Meetings of the World Bank and International Monetary Fund present what may be the most significant moment of opportunity since the 1940s to enact major structural change to improve development finance arrangements and outcomes. Whether this momentum for transformation is harnessed or missed will depend on whether formal decisions provide real future leverage for:

1. Valuing investments that reduce vulnerability and enhance macrocritical resilience;

2. differentiating in multiple dimensions between risk-building and resilience-building activities;

3. prioritizing crisis response funding and multilateral cooperation that deliver multiple positive externalities—including, for instance, nutrition security, human health, economic inclusion, human rights and gender equality, and climate-resilient development;

4. supporting a participatory capital to communities approach that aligns benefits at the human scale with supranational decision-making.

The effort to make international finance more just and inclusive has gained significant traction since Barbados Prime Minister Mia Mottley called on world leaders at the COP26 in Glasgow to account for vulnerability, value accountability, and deliver more just and sustainable outcomes. At the COP27, last year in Egypt, the principles for vulnerability-sensitive debt relief were formalized into what is now called The Bridgetown Initiative.

From a systems perspective, it makes sense to invest in this way. The only reason individuals and institutions don’t take advantage of this opportunity is that incentives reward them for focusing on narrower gains that can create systemic inefficiencies and compounding hidden costs.

International financial reform is about shifting those incentives and making clear the higher value of investing to achieve cascading co-benefits.

• The idea is to reduce vulnerability, enhance the baseline of wellbeing, then build on that more solid foundation.

• As more of the overall system in any given place is operating with reduced vulnerability, investments start to achieve a resonance that delivers more co-benefits more regularly for more people.

• Instead of the Sustainable Development Goals being lofty but unreachable ideals, they should become investable realities.

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