Development Committee: The Managing Director's Written Statement April 2023

Tentative signs of stabilization of the global economy have receded with recent financial sector turmoil. Headline inflation is moderating on the back of retreating commodity prices, but sticky underlying price pressures are complicating disinflation efforts. While growth in low-income developing countries (LIDCs) has been higher than in the rest of the world, its level is insufficient to address momentous challenges that range from combatting poverty to coping with climate change. Moreover, elevated debt levels and higher borrowing costs due to tighter global financial conditions leave policymakers with little fiscal space. Containing inflation, safeguarding financial stability, and protecting the vulnerable remain immediate policy priorities. At the same time, countries need to preserve or—in some cases—restore debt sustainability, which often requires better targeting of fiscally costly support measures taken in response to the COVID and commodity price shocks. Multilateral cooperation is more important than ever as many challenges are global, but it is acutely under threat from fragmentation.