Introduction
Delegates from Africa, Asia and Latin America concluded this week’s meetings of the International Monetary Fund and World Bank with renewed frustration about the way repeated external shocks are undermining efforts to tackle debt burdens, carry out structural reforms and improve living standards. Officials described a mounting sense of exhaustion; nations that had begun to recover from past crises now see those gains being eroded as global energy and food prices jump.
Repeated blows to fragile recoveries
Policymakers said the conflict that sparked steep increases in oil and fertilizer prices is already weighing on growth prospects and pushing up inflation. The rise in energy and food costs threatens to widen fiscal deficits, particularly in countries that had only recently stabilized after defaults, including Zambia and Sri Lanka. Officials warned that buffers built after the pandemic, the Russia-Ukraine war and wider trade disruptions have been shrinking under the strain.
"It’s like you got hit in the head many times. Once you got up and then you got hit again," said Chayawadee Chai-anant, assistant governor of Thailand’s central bank, describing the difficulty of sustaining a recovery when shocks recur.
The IMF has already trimmed its growth outlook for emerging markets for 2026, cutting the forecast to 3.9% from 4.2% in January 2026, and officials said those projections could deteriorate further if the conflict endures.
Policy reform gains under threat
Reform efforts in several countries are under direct pressure. Nigeria, for example, removed costly fuel subsidies, eased foreign exchange rules and simplified regulations to attract foreign capital. Yet officials there described a sense that external events are wiping out hard-won advances.
"We find that we are doing all we can, and it is shock after shock, externally and exogenously created," said Nigerian Finance Minister Wale Edun. "That sort of takes away from achievements and from our progress."
Reza Baqir, head of sovereign advisory services at Alvarez & Marsal, said countries that had implemented difficult measures - from debt workouts to subsidy removal - now face fresh fiscal destruction from developments beyond their control. "It’s a depressing mood, and it is also a repeated demonstration of the consequences on bystanders, where due to developments not of their own making, they have to deal with a severe economic crunch," he said.
Multilateral institutions offer limited new instruments
During the meetings, IMF and World Bank leaders emphasized caution about resorting to energy subsidies and acknowledged the political risks of higher food and fuel prices, including social unrest and increased migration. But their announcements stopped short of unveiling fundamentally new lending instruments.
IMF Managing Director Kristalina Georgieva said that at least 12 countries are seeking loans to help manage the shock, and estimated demand could range from $20 billion to $50 billion depending on how long the conflict persists. The World Bank said countries could access up to $25 billion in crisis response funds quickly, and up to $60 billion over six months.
Two days into the meetings, World Bank President Ajay Banga said the institution could make as much as $100 billion available by year-end if needed by restructuring its balance sheet. Still, neither the IMF nor the Group of 20 - which had earlier suspended debt servicing for the poorest countries during the early pandemic - presented new mechanisms designed to break the recurring cycle of crisis.
Calls for a rethink of financing and resilience strategies
Several voices at the meetings argued that the familiar toolkit - short-term crisis finance and conventional conditionality - will not by itself restore medium-term sustainability for vulnerable countries. Christina Segal-Knowles, now with the Rockefeller Foundation and a former White House official, said the Bank and Fund effectively signaled an ability to do what they have done before, but warned that those measures have not put many countries back on a durable path.
"But you have a set of countries that are still vulnerable. Those tools have not put these countries back in a place where they’re sustainable," she said. She urged thinking about forms of financing that could break the cycle and reduce the likelihood that another shock will return countries to the same fragile starting point.
Edun, who chairs the G-24 group of developing nations, pressed multilateral institutions to act but also emphasized the need for greater self-reliance. With official development assistance falling and bilateral aid cuts biting, he said countries must focus on mobilizing domestic resources and deepening regional trade ties, citing intra-African integration as an example.
Shift toward regional coordination and resilience investments
Throughout the week, officials described plans to strengthen resilience against future energy shocks by accelerating investment in renewable energy and by leveraging local resources such as critical minerals to drive jobs and growth. Albert Park, chief economist at the Asian Development Bank, said Asian economies were moving quickly to shield themselves from second-round effects. He pointed to Vietnam and Indonesia as nations that had already announced new renewable energy investments, with more likely to follow.
Officials acknowledged the tension between the need for rapid action and the search for durable strategies. Many leaders expressed a desire for longer-term financing and larger-scale support to avoid repetitive debt traps, but they also conveyed concern that the existing tools would leave them exposed to the next major shock.
Human and economic costs
World Bank forecasts presented during the meetings underscored the potential human toll if the conflict continues. A prolonged shock could push an additional 50 million people into acute food insecurity and cost roughly 10-15 million jobs in the near term. The institution framed these figures in the context of already-thin safety cushions: many vulnerable groups never fully recovered from prior crises, leaving social safety nets and economic buffers eroded.
"The cushion has been quite low, because it’s never recovered back all the way, so it’s thinner and thinner and thinner…especially for the fragile people," Chai-anant said. "That’s why this crisis, I think it’s going to be more widespread."
Outlook and options discussed
Delegates left the meetings with an intensified sense that while short-term liquidity and crisis lines are necessary, they are not sufficient. Options discussed included longer-term lending, larger-scale financing packages and novel forms of support that would aim to put countries on a more sustainable footing over time. Yet the week’s official statements largely circled back to scaling up existing instruments rather than launching fundamentally new ones.
For many developing-country officials, that gap between the severity of the shocks and the depth of available new instruments underscored the need for stepped-up regional coordination, domestic resource mobilization and targeted investments in resilience sectors such as renewables and critical minerals. Policymakers said those moves could both reduce vulnerability to imported energy shocks and create growth and employment opportunities.
Conclusion
As the global economy confronts higher energy and food prices driven by the recent conflict, developing countries face an acute policy dilemma: continue to rely primarily on multilateral emergency lending and short-term crisis instruments, or press for a reconfiguration of financing that prioritizes longer-term sustainability and regional self-help. Officials at the IMF-World Bank meetings signaled a growing urgency to explore the latter path, even as the institutions pledged expanded but familiar forms of support.
Key figures and institutional commitments cited:
- IMF 2026 growth forecast for emerging nations lowered to 3.9% from 4.2% in January 2026.
- IMF estimate: 12 or more countries seeking loans, with demand of $20 billion to $50 billion depending on war duration.
- World Bank crisis response funds: up to $25 billion available quickly, up to $60 billion over six months; potential to make up to $100 billion available by year-end via balance sheet restructuring.
- World Bank projection: a prolonged shock could add 50 million people to acute food insecurity and eliminate some 10-15 million jobs near term.