The International Monetary Fund and the World Bank Group issued a series of economic assessments and policy updates in recent days, covering program reviews in West Africa and Central America as well as an important shift in the World Bank’s climate finance framework. The latest developments offer insight into how multilateral institutions are navigating an environment of elevated geopolitical uncertainty, energy price volatility, and persistent development challenges.
The IMF Executive Board completed the combined third and fourth reviews of Togo’s economic program under the Extended Credit Facility arrangement on June 29. The ECF arrangement, approved in March 2024 in an amount equivalent to approximately SDR 293.6 million, supports Togo’s reform agenda aimed at strengthening fiscal and debt sustainability while laying the foundations for more inclusive growth. According to the IMF, Togo’s economy has remained resilient, with real GDP growing by about 6 percent in 2025, led by the services sector, as inflation eased. However, growth is expected to soften temporarily in 2026 and inflation to rise, mainly due to spillovers from heightened geopolitical tensions, particularly the Middle East conflict. Most quantitative performance criteria for the review period were met, and seven of eight structural benchmarks have been implemented. The IMF emphasized the importance of sustaining fiscal consolidation to preserve debt sustainability, advancing tax policy reforms to increase domestic revenue mobilization, and addressing banking sector vulnerabilities through an independent asset quality review.
Also on June 29, the IMF Executive Board completed the fourth and fifth reviews of Honduras’ arrangements under the Extended Fund Facility and Extended Credit Facility. Honduras’ economy grew 3.8 percent in 2025, supported by record-high coffee prices and surging remittances, though growth is projected to slow to 3.3 percent in 2026 as higher global oil prices weigh on activity. Headline inflation, which converged to the 4 percent objective in 2025, is projected to rise to 5.7 percent by end-2026, driven by higher energy costs. Fiscal performance has been strong, with a deficit of 0.7 percent of GDP in 2025 outperforming the program target of 1.5 percent. The IMF stressed the need for continued fiscal discipline, improved targeting of energy subsidies, and renewed reform momentum in the energy sector to limit fiscal risks from the state-owned electricity company. The Board approved a waiver for the missed performance criterion on the stock of domestic arrears at the electricity utility ENEE.
The World Bank Group announced on June 29 that it will extend its Climate Change Action Plan framework and retire the existing 45 percent climate co-benefits target and the 35 percent portfolio target. In a statement, the Bank said its climate work will remain client-driven, supporting countries in delivering on their own ambitions as outlined in their national plans and Nationally Determined Contributions. The Bank will shift from tracking inputs to measuring outcomes, with continued reporting on two scorecard indicators: net greenhouse gas emissions and beneficiaries with enhanced resilience to climate risks. The Independent Evaluation Group will perform an evaluation of the CCAP. The World Bank also indicated it will explore ways to better structure engagement on adaptation, nature, and pollution.
These developments reflect a multilateral system adapting to a fragmented global economy. While program countries like Togo and Honduras show resilience supported by IMF engagement, rising energy costs and geopolitical risks continue to cloud short-term outlooks. Meanwhile, the World Bank’s recalibration of its climate framework signals an evolution toward outcome-driven development finance.
Sources: IMF Press Release No. 26230 (Togo ECF Review), IMF Press Release No. 26228 (Honduras EFF/ECF Review), World Bank Group Statement (Climate Action Plan Update)
Sources: IMF Press Release No. 26230 (Togo ECF Review), IMF Press Release No. 26228 (Honduras EFF/ECF Review), World Bank Group Statement (Climate Action Plan Update)
