Answers were largely found wanting last week as politicians, policymakers, multilateral officials, bankers and investors gathered in Washington DC last week for the IMF and World Bank Annual Meetings.
Inflation, the surging dollar, the energy crisis, debt crisis, food insecurity and climate change were all vying for a place at the top of the agenda, yet the response was mostly underwhelming. As GlobalCapital’s sister publication, GlobalMarkets, wrote, tensions between countries and power blocs are putting severe strain on efforts towards multilateral cooperation, just when it is most needed.
For a start, internal disagreements prevented the International Monetary and Financial Committee, the IMF’s policy arm, and the G20 from putting out a joint communiqué, because G7 countries wanted strong language against Russia’s invasion of Ukraine. More directly relevant to bond markets, there was no progress on improving the G20’s Common Framework for debt restructuring.
Former Reserve Bank of India governor Raghuram Rajan told GlobalMarkets that he does not “see a huge amount of global goodwill”, while former US treasury secretary Larry Summers told the IIF conference he believes the “fire department is still in station”. And these echoes of disappointment could be heard all over the US capital.
“I think this meeting is not going to be remembered for anything except being a missed opportunity,” concluded Summers.
It would therefore be easy to paint the first fully in-person Annual Meetings since 2019 as something of a waste of time.
After much philosophising during the early months of the pandemic about the realisation that we all needed to travel less, here were thousands of delegates flying in from all over the world and unable to agree on just about anything. Couldn’t the same have been achieved virtually — without the carbon footprint, and saving time and money for the public officials that travelled to the meetings? That a significant proportion of sessions at the events focused on sustainability would appear particularly ironic.
Not just saving the world
In fact, in-person gatherings such as these are more important than ever. The sense of urgency may not have led to major multilateral agreements or actual policy making, but it perforated the air in a way that would simply not have been possible over Zoom or any other virtual platform. Attendees, whether from the private, public or multilateral sector, could not help but have the basic thesis drummed into them: there are grave consequences facing emerging economies in the world of high inflation and a rampant dollar, and this is going to make raising climate finance catastrophically difficult.
Now, standing around discussing this over canapés is not going to save the world, but it is still important. The sense of urgency can up the pressure for more action, while smaller, vulnerable states that often lack a voice can be emboldened by physically meeting leaders from other countries facing similar problems, not to mention being in the room as the world’s foremost institutions focus on these issues.
Indeed, the in-person format did provide an opportunity for the likes of Barbados PM Mia Mottley to cause quite a stir. Indeed, Mottley was key driver behind the IMF launching its Resilience and Sustainability Trust last week — a potentially transformational moment in its role, as the first time it is offering long-term financing.
Even if all of this is wishful thinking, do not expect in-person meetings to go anywhere. The day-to-day of bond market issuers, bankers and investors might not have particularly altruistic goals, but it is a crucial part of a functioning global economy. The overwhelming feedback from all three groups is that virtual meetings are not up to scratch.
Surely, online conferences might allow you to have more meetings, but the quality is far lower. Take the EM bond buyer who says one major finance minister refuses to speak with him on Zoom, but accepted his offer of a drink. Think about the corridor conversations with the competition that would be unthinkable on a monitored call.
One investor told GlobalMarkets that he learned a lot about the personal political leanings of certain IMF mission chiefs by seeing them in-person in a way that would be otherwise impossible. Or consider how much easier it can be to meet a client if you’ve bumped into said issuer at a drinks party the night before.
Days after the IMF meetings finished, Uruguay — which has been discussing its innovative SLB structure for years — finally started its official investor roadshow. It is surely no coincidence that this comes after the finance ministry and DMO were doing the rounds in the US capital.
There were times during the week when the tone was truly apocalyptic. But if the end comes, you can be assured the international community will be gathered in Washington to watch it.