Washington, DC: On June 3, the Executive Board of the International Monetary Fund (IMF) discussed the staff paper on the contribution of the IMF to the international financing for development agenda, prepared in view of the 4th Financing for Development Conference (FfD4) to be held in Sevilla, Spain from June 30 to July 3, 2025. The paper outlines the challenging context for development, updates staff's assessment on the achievability of Sustainable Development Goals (SDGs), and proposes actions to accelerate development progress.
The series of shocks since 2020 has added to longstanding structural challenges, with low-income and fragile countries affected the most. Debt vulnerabilities deserve attention, particularly for low-income countries . While debt appears sustainable for most countries, many are facing high interest costs and elevated refinancing needs that constrain their ability to finance critical spending necessary to progress on their development path. Against this background, achieving the Sustainable Development Goals by 2030 appears increasingly unlikely.
Accelerating development progress will require a major collective effort, including advancing a strong domestic reform agenda, providing adequate international support to complement and facilitate domestic reforms, and proactively addressing debt vulnerabilities. Importantly, while developing countries share many characteristics, increasing heterogeneity across countries calls for appropriate differentiation in countries' policy and reform agenda, as well as in the support from the international community.
The IMF has a strong role to play in supporting countries maintain or restore macroeconomic and financial stability, which is a key condition to enable sustainable growth and development. Through its surveillance, capacity development, and financial support to countries faced with balance of payment needs, the IMF helps countries advance this agenda, including through continuous adjustments in its policies to ensure they remain fit for purpose and aligned with evolving needs of the membership. It also plays a leading role on debt and the global debt architecture, through its monitoring of debt vulnerabilities and debt sustainability assessments and further enhancing its work to tackle debt challenges and improve debt restructuring processes, including through the Common Framework and progress at the Global Sovereign Debt Roundtable . In all these activities, the IMF collaborates closely with partners, particularly the World Bank.
Executive Board Assessment [1]
Executive Directors welcomed the opportunity to discuss the contribution of the IMF to the international financing for development agenda, as well as the review of recent experiences in the IMF's collaboration with the World Bank, ahead of the 4th Financing for Development Conference. Directors concurred with staff's analysis of the challenging context for development, as the series of shocks since 2020 has added to longstanding structural challenges weighing on economic and social progress in developing countries, with low‑income and fragile countries affected the most.
Directors agreed that debt vulnerabilities deserve specific attention, in particular for low‑income countries. They noted that, while debt appears sustainable for most countries under baseline assumptions, uncertainties and risks to the baseline have increased significantly. In addition, many countries face high interest costs and elevated refinancing needs that constrain their ability to finance critical spending necessary to progress on their development path.
Directors noted with regret that achieving the sustainable developments goals (SDGs) by 2030 appears increasingly unlikely, as it would require financing that exceeds credible assumptions and surpasses what countries could absorb without creating additional macroeconomic imbalances.
Directors agreed that accelerating development progress requires a major collective effort comprising strong domestic reforms, significant international support, and proactively addressing debt vulnerabilities. They noted that, while developing countries share many characteristics, increasing heterogeneity across countries calls for appropriate differentiation in countries' policy and reform agenda, as well as in the support from the international community.
Directors emphasized the importance of advancing a strong domestic reform agenda to maintain or promote a stable and sound macroeconomic and financial environment and boost private‑sector led growth and job creation. This includes increasing the efficiency of public spending and optimizing the use of available resources, mobilizing domestic resources, strengthening debt management, and improving governance. These reforms are also key to increase resilience against external shocks.
Directors also agreed that international support, through well‑coordinated and sequenced capacity development (CD), and additional public and private financing, will be critical to complement and facilitate domestic reforms. They underlined the importance of proactively addressing debt challenges and supported the proposed approach to: (i) improve further debt restructuring processes to ensure countries with unsustainable debt have access to timely and sufficiently deep debt relief, building on progress already made in particular under the Common Framework and through the work at the Global Sovereign Debt Roundtable (GSDR); and (ii) accelerate the implementation of the "3‑pillar approach" to help countries with sustainable debt and a robust reform agenda, where productive spending is crowded out by high debt service. They welcomed the recent publication of the GSDR "Restructuring Playbook" and supported further strengthening the IMF's contribution to help address debt vulnerabilities, consistent with its role and policies and respecting its duty of neutrality. They also underlined the importance of further enhancing debt transparency and the accuracy of debt data.
Directors agreed that, while the IMF is not a development institution, it has a strong role to play to help member countries maintain or restore macroeconomic and financial stability, which is a key condition to enable sustainable growth and development. They underlined the importance of IMF surveillance, CD, and financial support to members faced with balance of payment needs, to achieve this objective, and looked forward to the upcoming comprehensive surveillance review and review of program design and conditionality. Directors highlighted the recent reforms to ensure that the lending framework remains fit for purpose, including the finalization in October 2024 of the review of the Poverty Reduction and Growth Trust (PRGT) facilities and financing and the review of the Charges and the Surcharge Policy, and the significant expansion of CD delivery over time, with a strong emphasis on supporting low‑income countries and fragile and conflict‑affected states. In this context, some Directors saw room to further scale up the IMF's concessional facilities and CD support. Some others cautioned against placing greater emphasis in IMF‑supported programs on development spending needs and higher financing volumes. Directors supported the continued active role of the IMF on debt issues and its sustained engagement in international efforts to address debt vulnerabilities. Some Directors noted that a greater emphasis in the paper on the IMF's existing work on climate would have better illustrated that the Fund is already actively contributing to help address these challenges, in line with its mandate. A few Directors also highlighted the macro‑critical nature of inequality and its impact on long‑term stability and development, and supported a deeper analytical and operational engagement on these fronts within the Fund's existing mandate.
Directors underlined the importance of IMF collaboration with partners, in particular the World Bank and relevant UN agencies, building on comparative advantages and consistent with each institution's mandate. They welcomed the review of recent experiences in the IMF's collaboration with the World Bank and underscored the critical importance of maintaining or further deepening this efficient collaboration, leveraging the respective expertise of both institutions for an optimal division of work and avoiding duplication.
Directors underscored the importance of clear communication to promote a better public understanding of the institution's unique role, mandate, and activities in fostering macroeconomic and financial stability, which is a prerequisite for sustainable growth and development.
[1] An explanation of any qualifiers used in summing up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm .
