bretton woods continues to provide stability?

• THEME 1: IMF crisis response provides short-term stability

  • Example: In 2022, the IMF supported countries hit by rising global inflation and debt, including Sri Lanka and Pakistan. Sri Lanka received a $3 billion bailout after its economy collapsed due to debt and inflation.
  • These bailouts prevented total economic collapse, stabilised currencies, and allowed basic imports like food and fuel to resume.
  • This shows the IMF still plays a vital role in managing balance-of-payments crises and stabilising fragile economies — a core Bretton Woods function.
• theme 1 against: Western dominance reduces global legitimacy

  • Example: Despite being the world’s second-largest economy, China still holds only 6.08% of IMF voting power(as of 2024), while the US holds 16.5% — enough to veto major reforms.
  • This imbalance has led to frustration and reduced the credibility of these institutions in the eyes of emerging powers.
  • Without reform to reflect the modern economic landscape, the Bretton Woods system loses relevance and risks being sidelined.
• Theme 2: World Bank fosters long-term development resilience

  • In 2023, the World Bank launched the Pandemic Fund and boosted green infrastructure funding, such as its $1.5 billion commitment to climate-resilient projects in East Africa.
  •  By investing in health systems and climate adaptation, the World Bank helps reduce vulnerabilities that can trigger economic instability.
  • While not as visible as bailouts, this long-term capacity-building stabilises economies structurally and enhances resilience to future shocks.
• Theme 2 against: The WB reinforces inequality

  • The WB has been criticised for continuing to promote large-scale privatisation and extractive development projects in Global South countries. In 2023, critics highlighted the IFC — a private-sector arm of the World Bank — for funding energy and infrastructure projects in Mozambique and India that displaced local communities and damaged ecosystems.
  • These projects often serve the interests of multinational corporations rather than local populations. In many cases, they create “development” without equity, worsening inequality and undermining long-term social stability. -> This reflects a neoliberal development model that prioritises GDP growth over human development. The World Bank’s persistent focus on market-led development -> often at the expense of local needs and environmental sustainability
• Theme 3: Bretton Woods system enables global policy coordination -> creates economic interdependence -> reinforces the concept of cooperation -> In response to the 2024 global debt crisis, the IMF and World Bank coordinated with the G20 Common Framework to restructure sovereign debt in Zambia and Ethiopia.

  • This structured, rules-based approach reduced the risk of chaotic defaults that could ripple through the global system.
  • These institutions remain central platforms for multilateral economic coordination, which is crucial in an increasingly interconnected world.
• Theme 3 against: Emergence of alternatives like AIIB and BRICS Bank

  • The AIIB, now with over 100 members (including European states), funded $3.2 billion in 2023 for green energy and digital infrastructure in Asia and Africa. Similarly, BRICS launched a New Development Bank (NDB) with growing loans to the Global South.
  • These institutions aim to fill gaps the Bretton Woods system hasn’t addressed — especially in infrastructure and development finance.
  • The rise of such alternatives shows that countries are losing faith in IMF/WB-led systems, suggesting the old Bretton Woods framework is being gradually replaced.