The World Bank and IMF Annual Meetings for 2025 are taking place in Washington, D.C., October 13–18, at the World Bank Group and IMF headquarters. The meetings bring together the international community to discuss global economic challenges and opportunities, with a focus on creating jobs and driving sustainable growth, according to the International Finance Corporation (IFC) and World Bank.
 
Meanwhile, with prices at record highs, the IMF should use its gold reserves to fund much-needed support for developing countries.

By Michael Galant and Ivana Vasic-Lalovic
WASHINGTON DC, Oct 15 2025 (IPS)

Countries across the Global South face an accelerating climate crisis, tepid growth, and unsustainable levels of debt. Yet hopes of finding support at the International Monetary Fund’s (IMF) Annual Meetings in Washington are dim. The IMF is tightening its purse strings — even as it leaves untouched a vast treasure of more than 3,000 tons of gold that offers a prime opportunity to stabilize the global economy.

While IMF lending yielded record income in FY2024, fears that Trump will cut off funding — combined with the organization’s exposure on an ill-advised,
US-directed mega-loan to Argentina — have prompted the Fund to reassess its assistance to those most in need.

At last year’s meetings, the IMF implemented a system of tiered interest rates on loans made through the Poverty Reduction and Growth Trust (PRGT) — a formerly interest-free lending facility for low-income countries.

The Fund also elected to maintain (if slightly modify) its controversial “surcharge” policy, which generates revenue for the IMF by charging onerous fees to highly indebted middle-income countries. Income from surcharges is now effectively being used to fund the PRGT, forcing these distressed countries to
subsidize the Fund’s concessional lending.

Yet while the IMF squeezes financing from the very countries it is meant to support, it is, in fact, sitting on hundreds of billions of dollars worth of idle firepower.

When the Fund was founded in 1944, members were required to pay at least a quarter of their initial contribution in gold, which at the time was the foundation of the global monetary order. The gold standard is long gone, but the IMF still holds 90.5 million ounces — or over 3,000 tons — of the precious metal, historically held at the central banks of major shareholders.

Critically, this gold is still on the IMF’s books at a price determined in 1944: roughly $48 per ounce. This year, amid geopolitical uncertainty and increased demand from central banks, prices soared to all-time highs; for the first time ever, gold prices now exceed $4,000 per ounce.

In other words, the IMF’s gold reserves are worth over 85 times more than its accounting would suggest.

Selling just 1.5 percent of these holdings would cover the income generated from all surcharge payments through 2030. Selling 10 percent would cover the PRGT’s entire current lending envelope for a decade.

There’s precedent for such a move. In 1999, when gold was $282 per ounce, the IMF sold about 444 tons of gold directly to IMF members, who immediately returned it at the same price in fulfillment of outstanding debts.

The IMF was thus left with the same quantity of gold holdings, but with about $3 billion in profit to provide debt relief for low-income countries as a part of the celebrated Heavily Indebted Poor Countries Initiative.

In 2009, with gold prices still less than a third of today’s, the IMF board agreed to sell an eighth of its holdings outright, generating $15 billion in proceeds, a portion of which was transferred to the PRGT.

So, what’s stopping the IMF from doing the same today?

An agreement to sell gold reserves requires an 85 percent vote of the IMF board. As the proceeds from gold sales are, by default, distributed to IMF members in proportion to their quotas, a sale to bolster IMF lending power would require prior commitment from members to return their share of the windfall. But these political hurdles have been cleared before, in both 1999 and 2009.

While the US, which alone holds an effective veto over major IMF decisions, would have to agree to any arrangement, it’s difficult to see a cause for objection. Strengthening global economic stability — and therefore demand for US exports — at no new cost to the United States should hardly run afoul of an “America First” agenda.

Moreover, common concerns about the impacts of a sale on the gold market mean little in today’s context. With prices at record highs, the market can easily weather any price drops from an IMF sell-off, which can in any case be mitigated through the use of phased sales and off-market transactions.

And while some have historically fretted over the prudence of selling off a portion of the institution’s “rainy day” fund, selling while prices are sky-high makes good financial sense, and would easily leave plenty for future need.

Even if the political challenges to a gold sale prove insurmountable, there may still be a way to unlock its benefits; the IMF can simply revalue its gold holdings to match the market price, thus increasing the assets on its books without conducting even a single transaction.

Germany, Italy, and South Africa have all recently taken similar actions with their national gold holdings, and there is some speculation that the United States might follow suit. In fact, the IMF’s own accounting guidelines recommend countries value gold holdings at the market rate.

Awareness of the need to tap the IMF’s undervalued gold reserves is growing. In the past year, leading experts, top officials from Brazil and South Africa, and the G-24, which represents developing country interests at the Fund, all called on the organization to consider a gold sale.

Seeing that call through would take additional political will. But if the alternative is letting developing countries founder in the current crisis — or worse, bleeding them dry in order to protect the IMF’s balance sheets — then the choice couldn’t be clearer.

Michael Galant is a Senior Research and Outreach Associate, and Ivana Vasic-Lalovic is a Senior Research Associate, at the Center for Economic and Policy Research (cepr.net) in Washington, DC

IPS UN Bureau

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Pedro Sánchez, Ursula Von der Leyen, António Guterres, from left to right, at the 4th International Conference on Financing for Development. Credit: Dati Bendo/European Union

By Michael Galant
NEW YORK, Jul 4 2025 (IPS)

UN Member States adopted the ‘Compromiso de Sevilla’ at the Fourth Financing for Development Forum (FfD4) which concluded July 3– the culmination of months of contentious negotiations that pitted wealthy nations against the developing world in competing visions for reform of the global economic architecture.

The wide-ranging outcome document will be met with both fanfare — from the host countries and UN officials keen to portray the process as a success — and criticism — from civil society groups lamenting the watering down of material commitments into so many toothless words. But buried in its 38 pages is a single paragraph that quietly plants the seed for a more transformative agenda:

We will establish a platform for borrower countries with support from existing institutions, and a UN entity serving as its secretariat. The platform may be used to discuss technical issues, share information and experiences in addressing debt challenges, increase access to technical assistance and capacity building in debt management, coordinate approaches, and strengthen borrower countries’ voices in the global debt architecture.

Uniting borrowing countries has long been a dream of those concerned with the imbalance of power in the global financial system. Creditors are organized into collectives like the Paris Club, they argue; so too should debtors work together to build collective negotiating power, underwritten by the threat of a coordinated default.

With two thirds of low-income and a quarter of middle-income countries in or near debt distress, a common negotiating front could not only obtain better terms of restructuring during times of crisis, but also bolster demands for lasting reforms of a failing system that keeps countries trapped in a vicious cycle of debt and underdevelopment.

This is easier said than done.

Developing countries, and the economic elites that typically govern them, are dependent on international finance, and reluctant to do anything that might spook financial markets. Simultaneously overcoming these fears in multiple countries, each with their own contexts and interests, is a tall order.

The FFD document thus conspicuously avoids the language of a “debtors’ club” or any threat of collective negotiation or default, leading instead with more neutral modes of cooperation like information-sharing and capacity-building. But even tentative steps toward cooperation can have a meaningful impact. Indeed, they have before.

In June 1984, eleven Latin American countries met in Cartagena, Colombia to coordinate their responses to the debt crisis that had by then roiled the region for two years. The resulting Cartagena Consensus was clear that it was not a “debtors’ club,” but a forum for collaboration. The group would meet five times in the years that would follow, developing common positions on the source of the crisis and the terms of its resolution.

The Cartagena Consensus is often held up as a cautionary tale for debtors considering coordination. The Group never became a fully realized “debtors’ club” capable of collective negotiation, and petered out before the crisis was resolved as creditors peeled away desperate debtors with sweetheart deals.

But even the tacit threat that a club could be in formation bore fruit. Principles developed collectively shaped early deals, the concessions from which bolstered the positions of subsequent negotiators, and less confrontational governments benefitted from gains won by the more radical.

As scholar Diana Tussie wrote at the time: “a significant improvement in the cost of the negotiated credit was achieved, spreads were reduced, rescheduling fees were drastically reduced, the cost of the loan was reduced, and the amortization period increased significantly.”

Rhetorically, the Consensus helped recast the crisis as a political one, rooted in global financial inequities and exogenous factors like rising interest rates in advanced economies, rather than a purely technocratic or moralistic question of responsible spending.

Today’s multilateral commitment to form a borrowers’ platform has advantages that Cartagena did not. While the developing world is facing a generalized debt crisis, it is not in the acute situation that beset the Cartagena Consensus, and so has an opportunity to gradually build its infrastructure under less desperate conditions.

The borrowers’ platform is to operate with UN support and a wider range of global participants. And the emergence of major new bilateral creditors, though not without its own challenges, may strengthen debtors’ negotiating hands.

Of course, the global debt challenge cannot be reduced to a zero-sum restructuring negotiation. Substantive reforms are needed to address the many faults in the debt system, from ongoing legislative efforts to combat creditor holdouts in Albany, to the establishment of a permanent multilateral sovereign debt workout mechanism — a top priority of debt relief advocates.

Yet these efforts have repeatedly been blocked by the intransigence of creditors. Movement toward reform will only be strengthened by the coordination of the countries that stand to benefit most.

A promise to establish a borrowers’ platform is far from a fully realized debtors’ club, and farther still from a panacea to the Global South’s ongoing debt crisis. But in a document short on transformative ambition, it is a concrete step toward the rebalancing of unequal power relations — and a sign that debtor countries will not submit themselves to creditor inaction forever.

Michael Galant is Senior Research and Outreach Associate at the Center for Economic and Policy Research (cepr.net) in Washington, DC.

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Better drawing rights from the International Monetary Fund (IMF) could assist with the just transition.

By Michael Galant
WASHINGTON DC, Oct 23 2024 (IPS)

This month, the International Monetary Fund (IMF) had an opportunity to end one of its most reviled policies and lift billions of dollars of debt off the backs of crisis-stricken developing countries. It chose not to.

The IMF’s ostensible mission is to promote financial stability by providing loans to countries facing economic challenges or crises. These loans must be repaid, with interest, and typically come with harmful conditions of austerity, privatization, and deregulation.

Since 1997, the IMF has also levied fees called surcharges, on top of the regular costs of a loan, on countries whose debt to the Fund exceeds a certain threshold. By the IMF’s logic, these highly indebted countries — like Pakistan, which is still recovering from unprecedented natural disasters, and Ukraine, which is in the midst of a war — surcharges provide an incentive to deter prolonged reliance on the Fund.

In reality, surcharges exacerbate already onerous debt burdens, siphoning scarce resources from countries in need of relief rather than punishment. As a result of the pandemic, the global economic shocks sparked by the war in Ukraine, climate change, and rising interest rates — circumstances well beyond any individual country’s control — the number of countries forced to pay surcharges to the IMF has nearly tripled in the past five years. Clearly, surcharges do not work as claimed.

As the burden of surcharges has grown, so has their opposition. In recent years, researchers have uncovered the profound harms caused by the policy, members of Congress have passed legislation demanding their reassessment, and civil society groups have organized discussions and letters pushing for their elimination.

Ultimately, a clear global majority — including every developing country, leading economists, UN human rights experts, and hundreds of organizations like Oxfam and the International Trade Union Confederation — stood on the side of discontinuing the policy.

Given this near-consensus, the policy’s clear harms, the fact that the IMF has no need for surcharge income, and the historical precedence for their elimination, many assumed that ending surcharges was a low-hanging fruit. Following years of pressure, the IMF initiated a formal review of surcharges this summer.

The outcome of that review, announced last week, provided a welcome measure of relief, but ultimately fell short. Rather than ending the counterproductive policy, the Fund raised the threshold at which surcharges must be paid, and slightly reduced their charge. The Fund also decreased its current non-surcharge lending rate from 4.51 percent to 4.11.

Because of the increased threshold, fewer countries will pay surcharges, though the number could still grow significantly in the coming years, as climate disasters and other external shocks force more countries to take on higher levels of IMF debt.

By the Fund’s measurements, these changes will reduce the costs paid by all borrowers, combined, by $1.2 billion annually. While this is better than what would have occurred without concerted external efforts, the Fund has ultimately doubled down on its procyclical logic while conceding only enough to alleviate pressure.

Inside reports indicate that the United States, which has the largest vote under the Fund’s undemocratic governance structure, was the primary blocker of more substantive reform, proposing instead to use the income from surcharges to cover for wealthy countries’ own funding shortfalls.

For many highly indebted countries, including Ecuador, Argentina, Ukraine, Egypt, and Pakistan, the failure to discontinue surcharges means a multi-billion dollar bill will soon come due, making it harder to reduce debts to sustainable levels or to finance development, climate action, and other critical needs.

This, in turn, adds fuel to the fire of an already vicious cycle of debt, underdevelopment, and climate change; nearly 80 developing countries are already in or at risk of debt distress, three quarters of which are highly climate vulnerable.

This is hardly the first time the IMF has imperiled the Global South. The IMF is perhaps best known for its role during the debt crises of the 1980s and 1990s, in which emergency loans were used to force developing countries to adopt neoliberalizing reforms that resulted in lost decades of economic growth.

In response to these evident harms, mounting global protests, and decreasing reliance on Fund lending, the IMF in the 2000s began to adopt better rhetoric, established new fora for civil society participation, and eventually even owned up to many of its failures. But while these cosmetic changes defused opposition, the Fund did not fundamentally alter its approach.

Since the 2008 financial crisis, and accelerating during the pandemic, developing countries have once again been forced to accumulate a powder keg of debt. The IMF’s response has not only been insufficient, but, in the case of surcharges and the continued insistence on austerity, actively harmful. Meanwhile, attempts to democratize the IMF’s governance structure and give greater voice to countries of the Global South have repeatedly faltered.

But while the IMF long ago revealed its true face, developing countries have had nowhere else to turn. In today’s increasingly multipolar world, that may soon change. China’s emergence as the world’s largest bilateral creditor, the establishment of the BRICS+’s New Development Bank and Contingent Reserve Agreement, efforts to build alternatives to the US dollar and its attendant monetary constraints — countries across the Global South are seeking to reduce dependence on the IMF.

While these alternatives remain nascent, the fact that the Fund has proven unresponsive to even the simplest of reforms should only hasten this process.

Civil society groups, meanwhile, who hoped that directly engaging with the IMF would lead to substantive change, may yet become disillusioned. If all this time, resources, and energy could not even end surcharges, perhaps the prospects of “change from within” should be abandoned — and the era of mass protest from outside the security perimeter, revitalized.

Discontinuing surcharges alone would not have solved the many crises facing the Global South. But the failure to do so has made clear that the solutions do not lie within the IMF. When even the low-hanging fruit is out of reach, perhaps all that is left is to strike at the root.

Michael Galant is a Senior Research and Outreach Associate at the Center for Economic and Policy Research (CEPR) in Washington, DC. He is also a member of the Secretariat of Progressive International. Views are his own. He can be found on X at @michael_galant.

IPS UN Bureau

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