WASHINGTON: The International Monetary Fund and World Bank on Friday said their 2029 annual meetings would take place in Abu Dhabi, United Arab Emirates, following a vote by the governors of the two institutions. The last time the IMF-World Bank annual meetings took place in the UAE was in 2003, in Dubai. The annual meetings bring together central bankers, ministers of finance and development, private sector leaders and others to discuss the most pressing issues facing the global economy. They are usually held for two consecutive years at the World Bank and IMF headquarters in Washington, and every third year in one of the institutions’ member countries. The 2026 annual meetings are slated to take place in October in Bangkok, Thailand.
The IMF said on Friday its executive board has agreed to retain the current floor for precautionary balances, which consist of general and special reserves, at 20 billion Special Drawing Rights, or nearly $29 billion. Precautionary balances provide a buffer to protect the Fund against potential losses from credit, income, and other financial risks.
IMF directors welcomed a continued increase in precautionary balances since they agreed on a medium-term target of SDR 25 billion, or nearly $36 billion, at the end of fiscal year 2024, the IMF said in a statement. As of October, the IMF held over SDR 26 billion, or $37 billion, in precautionary balances, according to the Center for Global Development, a Washington think tank. Directors agreed the overall balance of risks to the Fund remains broadly unchanged, although their composition has evolved, with credit risks having edged up.
Most directors supported retaining the current medium-term target, while a few directors favored raising the target. During their discussion, directors cautioned the Fund’s income and precautionary balances projections are subject to heightened uncertainty including from “financial market volatility and intensifying downside risks to global growth stemming in particular from geopolitical developments in the Middle East.” They stressed this environment called for continued vigilance and close monitoring of income developments and the adequacy of precautionary balances to ensure the Fund remains financially strong.
Growth forecast
The Fund will lower global growth forecasts due to the Middle East war, its chief said Thursday, warning of the conflict’s “scarring effects” despite a fragile ceasefire. “Even in a best case, there will be no neat and clean return to the status quo ante,” IMF managing director Kristalina Georgieva said. Georgieva said that – even in the fund’s “most hopeful scenario” – spiraling energy costs, infrastructure damage, supply disruptions and a loss of market confidence meant growth would be less than expected.
The IMF also anticipates having to provide up to $50 billion in immediate financial assistance to countries affected by the war, with food insecurity set to affect at least 45 million people.
“Given the spillovers from the war, we expect near-term demand for IMF balance-of-payments support to rise by somewhere between $20 billion and $50 billion, with the lower bound prevailing if ceasefire holds,” Georgieva said. The IMF chief was kicking off the annual Spring Meetings co-hosted by the International Monetary Fund and the World Bank in Washington, which bring together top economic policymakers from around the world.
Speaking on Bloomberg TV on Thursday, World Bank President Ajay Banga said his institution could put up as much as $25 billion “very quickly” in financing to developing countries affected by the war. He said as much as $60 billion may be made available over the longer term, if countries need it. The US-Zionist war on Iran, launched on February 28, has engulfed the Middle East in violence, snarled supply chains and sent oil prices surging after Tehran virtually blocked the Strait of Hormuz.
Tehran and Washington have traded accusations of violations of the ceasefire terms, with talks aimed at a more durable peace slated for Saturday.
Georgieva highlighted the “asymmetric” effects of the crisis, hitting low-income energy importers much harder than others. “Spare a thought for the Pacific Island nations at the end of a long supply chain, wondering if fuel still reaches them in the wake of such a severe disruption,” she said. — Agencies
The IMF and World Bank have also formed a coordination group to address the energy market impacts of the war. A top-level meeting of that body will take place on Monday. As part of the meetings, the IMF will release its annual Fiscal Monitor report, which is expected to flag rising government debt as countries tackle repeated economic shocks. In a new report this week, the IMF detailed the economic costs of war, estimating that output in countries where fighting takes place drops by three percent at the outset, “and continues falling for years.” — Agencies