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Last month, young people in Bangladesh revolted against their government over a jobs quota bill that would have reserved 30 percent of public-sector jobs for family members of veterans of the 1971 war with Pakistan. Protestors did manage to drive out the country’s prime minister Sheikh Hasina, though not before hundreds were killed by authorities.
Bangladesh, like many developing countries in a dollar-centered world, suffered disproportionately from Covid-19 and from the higher commodity prices that ensued in the wake of the lockdowns. A recent IMF review found that its public debt servicing costs were almost 72 percent of its combined export and grant income. Millions of Bangladeshis endured lengthy blackouts in 2022 when contracted LNG shipments were acquired by Europeans for higher prices on the spot market after Russia disrupted continental gas supplies.
Bangladesh earns 84 percent of its export income from garments, but the statutory wage for garment workers is less than two thirds of the typical household cost of living, according to the Anker Research Institute. In 2023 several big western clothing brands signed a Fair Labor letter to Hasina asking that the wage be increased, noting that it had not increased since 2019 despite a substantial increase in living costs. Workers’ unrest in Bangladesh has often been repressed because of ties between the country’s garment oligarchs and Sheikh Hasina’s ruling party.
A new approach
At COP 28 in Dubai last December, the IMF announced that Bangladesh would be the beneficiary of a “climate and development platform.” The announcement was essentially a pledge from development funders, the IMF, two donor governments, and the government of Bangladesh to coordinate on finance in the country. In its content, the pledge closely resembles what is now commonly referred to in development finance circles as “country platforms.”
Country platforms are now an increasingly hot topic, and are being advanced by the Brazilian hosts of this year’s G20, along with the IMF, multilateral banks, G7 governments, and the financial sector. An increasingly reached-for concept, the terms in which it will be realized are as yet unclear. Analysts at ODI have suggested that, in their most basic form, platforms are simply an extension of “development effectiveness”—jargon for measuring the impact of development finance. In recent years, they write, the country platform idea has coalesced around a few key planks. The main idea is to coordinate between international finance institutions, as well as between those institutions and private finance—while emphasizing that states themselves should retain agency to decide how the money is spent. The idea is for some overall coordination as each country drafts its Nationally Determined Contributions (NDCs), Long Term Strategy (LTS), National Biodiversity Strategies and Action Plans (NBSAPs), and National Adaptation Plans (NAPs).
This current definition of country platforms arose from the G20 Eminent Persons Group—a panel of current and former high-level finance officials such as Raghuram Rajan, Lord Nicholas Stern, and Ngozi Okonjo-Iweala, which in 2018 published a report on international financial architecture and international financial institutions. The report proposes a kind of liberal, development financialization agenda that Daniela Gabor would later name the “Wall Street Consensus,” and country platforms were the Group’s second recommendation:
A country platform must be owned by its government, encourage competition, and retain the government’s flexibility to engage with the most suitable partners. However, transparency within the platform is essential to avoid zero sum competition, such as through subsidies or lower standards.
Since that recommendation, the spike in essential commodities and the strengthening US dollar have shifted a situation that was already urgent into one that is catastrophic for many countries. Larry Summers and NK Singh pointed out earlier this year that net flows are moving in the wrong direction: capital outflows to private creditors have come to overshadow the increased concessional lending to developing countries. Despite the World Bank’s plans to mobilize private-sector money—“billions to trillions,” went the catchphrase—developing countries are being drained.
National policy reforms are a strong theme in the IMF and World Bank visions of country platforms, but the most frequently invoked purpose is to increase the volume of finance—especially private finance—that flows into a particular country. Country-level coordination between development institutions and the national government holds the promise of a one-stop shop for investment landing in global South countries.
Insofar as the country platforms approach is an attempt to orient all participating actors toward medium-to-long term coordination, its benefits and requirements should be understood from the point of view of those actors, which we break down into three types:
- International financial institutions. Multilateral development banks have already declared in a joint statement that they will prioritize country platforms, emphasizing a shift from short-term projects to “a longer-term, programmatic perspective.” In particular, the IMF and the World Bank also seem focused between themselves—between the two institutions—shifting their respective financing programs toward longer-term and more systemic “policy reforms.”
- Private Investors. Mark Carney’s GFANZ alliance called for country platforms to be “a single focal point to channel technical assistance and public and private finance.”
- States. Importantly, country platforms will allow states to set national priorities themselves, rather than be subject to requirements imposed by foreign institutions.
National Policy
The Bangladesh “Climate and Development Platform” announcement last December brought together various development finance entities including the IMF, World Bank, Asian Development Bank, European Investment Bank, Green Climate Fund, Japan International Cooperation Agency, and the governments of South Korea and the UK. A total financial commitment of $1.85 billion was made—though some of this includes commitments already made.
For its part, the IMF announcement said, Bangladesh would enact reforms required by the Fund itself, such as a “periodic formula-based price adjustment mechanism for petroleum products,” improvements to water supply, and updating its Green Bond Financing policy.
In May, the IMF and World Bank announced an “Enhanced Cooperation Framework for Climate Action” in which they’d collaborate on identifying policy reforms, as well as work with other development partners and, if requested, developing country platforms. A month later, Madagascar was declared to be the first site for this collaboration; the IMF and World Bank “stand ready” to develop a country platform there.
Country platforms are in no way immune from private finance’s tendency to see a given nation’s shortcomings, rather than those of finance itself, as the barrier to investment. In fact, foreign private investors are often beholden to cultural and regulatory constraints that have little to do with the degree of national coordination in countries they might invest in. Advait Arun described these constraints for us last year, and a recent report from Finance Watch analyzes the constraints specifically affecting European pension funds and insurers. Investors are frequently asking countries to present a more investible version of themselves, but in fact investors themselves are often simply prevented from engaging in anything beyond the safest assets in the richest and most stable developing countries.
Reading through the literature on the topic one gets the sense of a chicken-and-egg dilemma. As for the implementation of these country platforms, certain risks are involved. Country platforms would work best in countries with strong institutional capacity and ability to coordinate internally; but those are likely the countries that are already most able to marshal development finance, climate finance, and private external finance in accordance with a sovereign strategy.
Even countries with exemplary governance, institutional capacity, and social and political harmony must exist within the ramshackle international financial architecture and be subject to foreign exchange rates, sovereign debt frameworks (or lack thereof), and shifting risk appetite in global capital markets.
Still, what is emerging is a World Bank with a more systemic agenda, working more closely with an IMF that can now (via its new Resilience and Sustainability Fund) lend beyond the short term. The two are collaborating with a particular eye on policy reforms. The prospect of deeper coordination between two such powerful institutions with a focus on national policy could be a boon for recipient countries, but for it to be just, as Brazil is emphasizing, it must be country led.
Still, as an approach to development finance, there are reasons to be optimistic. Framing finance for climate and development at the country level may well allow more space for sovereign development strategy and multilateral support. As the US administration becomes more cognizant of the need for a substantive international effort—a Green Marshall Plan, but for real this time—any opportunities for agency among countries with less access to capital and little strategic power might be precious.
The Polycrisis is a publication focusing on macro-economics, energy security & geopolitics.
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