“Uncertainty” was the buzzword that dominated the 2025 Spring Meetings of the International Monetary Fund (IMF) and the World Bank, held in Washington DC from 21 to 26 April. The IMF’s downward revision of its global growth forecasts, along with both institutions’ expressions of alarm over the declining volume of public development aid were expected. What was surprising, however, was that trade tariffs—the real elephant in the room and a root cause of increased global instability—were barely mentioned in the official statements, despite their potentially devastating effects, especially on Low Income Countries (LICs).
The global economy, even before Trump’s presidency, was already characterised by rising public debt and strong fiscal pressures. However, current geopolitical and trade uncertainty is contributing to slowing investments and worsening access to credit, especially in the world’s poorest nations. Many countries continue to find themselves at a crossroads: servicing their debt or investing in sustainable development and climate action?
The new US trade strategy—the majority shareholder in the Bretton Woods institutions—further complicates matters. The threat of imposing tariffs to push fossil fuel-related goods onto global markets risks compromising growth prospects and the development of clean energy supply chains in developing countries. These investments are often supported by public or guaranteed debt, which risks financing stranded assets in an increasingly short timeframe. The result: a growing risk of debt unsustainability for many countries, especially in Africa, which risk becoming trapped in obsolete and financially risky infrastructures.
Spring Meetings 2025: political influences on climate ambition
The main development from the Spring Meetings came from the US Treasury Secretary Scott Bessent, whose remarks left little room for interpretation: the IMF and the World Bank should return to their “fundamentals”, focusing on macroeconomic stability and fiscal discipline, with reduced emphasis on climate, social and gender issues. This approach not only challenges the role of multilateral financial institutions in supporting the energy transition but also risks undermining already fragile international cooperation.
In response to these statements, climate ambition seems to be gradually receding even at the top of financial institutions themselves. IMF Director Kristalina Georgieva avoided explicitly addressing the issue, referring instead to the need to support the most vulnerable countries in managing economic risks arising from “extreme weather events.” Attention then quickly shifted to more political issues, such as the controversial $20 billion loan package to the Argentine government—approved without parliamentary oversight just months before the elections.
The World Bank, meanwhile, continues to send mixed signals: on one hand, President Ajay Banga reiterates the institution’s commitment to climate finance, while on the other, he introduces an “all of the above” approach to energy that explicitly includes natural gas and, for the first time in years, nuclear energy. This direction is expected to be formalised in the Bank’s forthcoming energy strategy, due for Executive Board approval in June. This change of course raises questions about the consistency of the Bank’s commitments to align its financing with the Paris Agreement.
This is the context for the recently signed agreement between the World Bank and Italy, aimed at strengthening bilateral cooperation to promote development in Africa. The agreement formalises a 25% increase in Italy’s contribution to the IDA—the Bank’s fund for the poorest countries—and supports the Mattei Plan, which targets investment in energy, infrastructure, healthcare, education and training. While the partnership aspires to co-finance high impact projects aligned with initiatives like “Mission 300” for electricity access, it remains to be seen how these efforts will reconcile development needs with an effective transition to a sustainable energy model.
From the G20 to COP30: in search of solutions and multilateralism. Italy leads the working group on sustainable finance with China
2025 is shaping up to be a year of transition for the G20 too, led by South Africa amid domestic political tensions and external pressures. The government’s recent budget proposal has stirred discontent at home, while on the international front, Pretoria has faced criticism, including publicly from the United States, over the content and approach of its G20 agenda. In this context, Italy has taken over from the US as co-chair of the Sustainable Finance Working Group, alongside China. Despite the lack of an official statement at the end of the ministerial meeting, work continued on reforming multilateral development banks (MDBs), improving the G20’s Common Framework for debt restructuring, and developing tools to moderate the cost of capital in Africa. The discussions also highlighted the urgent need to reform global trade rules and restore the importance of multilateralism, while issues such as taxation remained in the background.
At the same time, Brazil—host of COP30—has begun to pave the road to Belém by organising the first meeting of the Circle of Finance Ministers, a platform bringing together 25 countries to support the Baku to Belém Roadmap, with the aim of mobilising 1.3 trillion dollars by 2035. The priorities include: MDB reform, innovative financial instruments, stronger regulatory frameworks and new country platforms to attract sustainable investment. This is an ambitious roadmap which, in the wake of the last G20 summit led by Brazil, recognises the fundamental role of finance ministers in climate action.
Debt crisis: seeking political resolve ahead of the Fourth Conference on Financing for Development (FfD4) in Seville
With global public debt set to rise by a further 2.8% of GDP in 2025 and exceed 100% of GDP by the end of the decade, the issue of debt sustainability remains central. Although there was plenty of talk at the 2025 Spring Meetings about the need to address the current crisis, few concrete solutions were put on the table.
The IMF presented its Restructuring Playbook, a practical guide for debtor countries pursuing debt restructuring. While this is a useful step in improving clarity and transparency, it fails to address the structural shortcomings of the G20’s Common Framework, which is still too slow, ineffective and lacking in binding force.
Several “technically and politically feasible” proposals emerged during the public event “Finding a way out of the debt morass”, hosted by the UN expert group on debt, co-chaired by Paolo Gentiloni and Mahmoud Mohieldin. These included rescheduling payment deadlines, swaps for the environment and education, strengthening the G20’s Common Framework, and creating a “Debtor’s Club” to rebalance power dynamics with creditors and provide a collective voice for heavily indebted countries.
During an event co-hosted by the Pontifical Academy of Social Sciences and Columbia University, Spanish Finance Minister Carlos Cuerpo outlined three concrete proposals in the context of the Sevilla Platform for Action, ahead of the FfD4 Conference. These include: a Debt Pause Alliance to temporarily suspend both public and private debt payments during crises; a Debt Swap Hub to facilitate debt conversions into sustainable investments; and a new $100 billion trust fund financed by Special Drawing Rights (SDRs) to support countries in debt distress.
The final report of the expert group on Debt, Nature and Climate, “Healthy Debt on a Healthy Planet”, underlined the need for an integrated approach to debt, nature and climate. Among its key recommendations were: systematically incorporating climate and environmental considerations into macroeconomic and fiscal analysis (starting with the renewal of the IMF’s debt sustainability analysis methodology); promoting debt restructuring linked to green investments; scaling up existing practices such as debt-for-nature swaps; mobilising private capital through innovative mechanisms, including special purpose vehicles that issue bonds backed by future aid flows, and strengthening countries’ debt management capacities sustainably, including through green fiscal reforms. The goal is clear: to enable countries to escape the debt trap without compromising on climate and development priorities.
Lastly, the Debt for Resilience Initiative (D4R), proposed by IISD, offers an alternative that shifts the focus from mere solvability to external sustainability. This initiative seeks to prevent disorderly adjustments and combine debt reduction with climate resilience investments, in coordination with the IMF and the United Nations. The mechanisms draw on some elements of the HIPC initiative but updates the framework to meet today’s challenges— including the need to ensure that public finance supports, rather than hinders, sustainable development.
These are concrete ideas, often technically sound and supported by a growing consensus among experts and civil society. Yet without real political momentum behind them, they risk remaining little more than words on paper. The challenge now is to turn this diplomatic and technical energy into shared political will. The next step will be FfD4: a critical test of whether the international community is prepared to respond seriously to the debt crisis, placing fiscal justice, sustainability and global solidarity at the centre of the agenda.
Photo by IMF photo, Spring Meetings 2025
