US to press for fundamental reforms of IMF and World Bank at G20 summit

The Biden administration is expected to press for a “fundamental reshaping” of global financial institutions such as the International Monetary Fund (IMF) and the World Bank at the G20 summit this weekend.

US national security adviser Jake Sullivan said this week the United States believed there should be high-standard, non-coercive lending options available to low- and middle-income countries.

It is understood the US believes that a reformed IMF and World Bank would offer a better alternative to lesser developed countries than on offer under China’s “belt and road” initiative for funding infrastructure projects across the world.

US president Joe Biden is scheduled to travel to India on Thursday for the G20 meeting of large world economies before travelling on to Vietnam.

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As part of the trip to India, Biden will hold a bilateral meeting with prime minister Narendra Modi.

On Sunday, Biden said he was disappointed that Chinese president Xi Jinping would not be attending the summit – a move seen in some quarters as a snub to India given tense relations between Beijing and New Delhi.

Sullivan said he believed the US, India and every other member of the G20 would encourage China to come to the meeting “in a constructive way”.

“As far as the question of tensions between India and China affecting the summit: Really, that’s up to China. If China wants to come in and play the role of spoiler, of course, that option is available to them.”

He said the focus of the US would be “on delivering for developing countries; making progress on key priorities for the American people, from climate to technology; and showing our commitment to the G20 as a forum that can actually deliver”.

“One of our main focuses heading into the G20 [will be] delivering on an agenda of fundamentally reshaping and scaling up the multilateral development banks, especially the World Bank and the IMF,” Sullivan said.

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“We know that these institutions are some of the most effective tools that we have for mobilising transparent, high-quality investment into developing countries. And that’s why the United States has championed the big effort that is currently under way to evolve these institutions so that they are up to the challenges of today and tomorrow.

“Just last month, president [Joe] Biden asked Congress for additional funds that would have the impact of increasing World Bank financing by more than $25 billion. And we’re working to make sure other partners follow our lead.”

Sullivan said Biden would “be calling on G20 members as leaders in the global economy to provide meaningful debt relief so that low- and middle-income countries can regain their footing after years of extreme stress”.

“He’ll be clear that the United States expects real progress on ongoing cases by the World Bank and IMF annual meetings in Marrakesh (in Morocco) next month. And he will be clear that we need all G20 members to be constructive and at the table with no exceptions.”

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Sullivan said the US believes “there should be high-standard, non-coercive lending options available to low- and middle-income countries”.

“That’s a fact. It is also a fact that World Bank reform is not about China, in no small part because China is a shareholder in the World Bank. So, growing the size, relevance, capacity of the World Bank to deliver for low- and middle-income countries is not against China. It’s for the entire international community, all of the shareholders of the World Bank – China being one of them.

“And we believe that, just as the United States would benefit from a more stable, more capable set of low- and middle-income countries being able to deal with their own problems with help from the World Bank and the IMF, China would benefit from that, too. ”

Speaking at a press briefing last week at the Center for Strategic and International Studies – a think tank – its chair in US-India policy studies Rick Rossow said the Biden/Modi bilateral talks will come just weeks after the Indian leader made an “extremely significant” state visit to Washington. He said this resulted in progress on security, supply chain and trade issues.

“India really wants the United States to articulate a forward-leaning security strategy for the Indian Ocean region. India’s concern about the United States’ view of the Indo-Pacific as the main kind of theatre of emerging security risk in the world [and] that the United States is overly focused on Taiwan, South China Sea, East China Sea and Pacific islands. And there’s not nearly enough attention on the Indian Ocean region. And that’s where India sees its primary security concerns rising now.”