>> from bloomberg's world headquarters, i am caroline hyde. >> romaine bostick. >> taylor riggs. >> prices are still waiting on economic growth. the global economic recovery supply chain is seeing more when it comes to apple.

we will look at this recovery and slow down andy controversy -- and the controversy. we begin with the relevance of the world bank. have low rates to borrow in money but out significant are these institutions anymore? there is some concern >> she got the -- >> she got the support. they are tamping it down and saying we are going to stick with this right now. we heard from the ims chief -- imf's chief economist. >> the board came out with a strong statement saying there is full confidence.

the issue of the data had nothing to do with the imf. we place incredible amounts of importance on data integration at the imf. we have many checks and balances. i feel good about where we are. >> you have been put under no pressure to make the data fit the narrative being delivered further. there is no incidence of that happening at the imf. >> i have never faced about pressure. >> you heard it there. what do you make of that? you heard the support. >> the accusations are not about the imf but this speaks to a larger issue.

they have pulled back the curtain on the geopolitical positioning and the lobbying that goes on behind these kinds of reports. we reported exclusively last week that there was lobbying by brazil in order to try and remove some analysis and criticism of the brazil climate policy from the report two months ago. this pulls back the curtain on the idea that these are political institutions. their analysis and research is supposed to take place apart from any kind of political pressure. you have countries constantly coming forward and saying your ranking should be this. that is part of what goes into the influences surrounding the staff and the economists and the pressure to face when they come up with this objective research. >> you use the words pull back the curtain, you're talking about an institution that had very noble ambitions back in the

40's. there has been a lot of criticism for years. this is about the objectivity of the imf. we might as well throw the road back in that pile as well. there has been a lot of criticism about the selection process. there has been a lot of criticism about the relevancy. whether we need these institutions in the capacity that they operate rather than a different sort of system. why are we to believe that what is alleged to have happened in this particular instance is just some sort of one off? >> it is a good question and it is highlighted by the statement we heard from janet yellen. we saw the imf director come out and say that the board agreed with her that the accusations in the report were unfounded but the treasury secretary said this

raised legitimate issues and legitimate concerns. this will be an issue for the going forward. they felt like the managing director got off easy in terms of the feedback or the reactions from the board. we wanted to see them take a stronger stance here and it is going to be something that is under focus in the weeks and months ahead. >> how do they ensure that the process -- you can't reverse engineer the way in which these organizations and institutions have been born but i feel that it takes us back to the question we made of the rating countries. the way in which people pay in which direction they clean, they have come out to show the necessity and clarity with which they work. is this something the imf and

world bank can do? >> they have numerous processes in place, numerous bodies within them that are supposed to be self examining and keeping the institutions honest and transparent. there is the pressure that comes from shareholders like the u.s. or japan, countries that are very focused on transparency and the processes, the underlying methods by which institutions do their research. this entire process has signed a light on that issue and it is something that when we talk to outside analysts and people who watch these institutions closely, they say it is going to be something that gets a lot more attention going forward that it has in the past. >> eric, it is not lost on us that the imf is coming out today and revising some global growth. economic growth projections.

supply chains, we are getting news that apple is getting hit with a lot of these supply chain issues as well. what do you make of the slowing global growth environment? >> it speaks to the importance of having strong imf and a strong world bank. the world economy saw its deepest recession in the number of decades since world war ii and potential for some of the fiscal and monetary stimulus in the coming months. potential for increased debt stresses there. the world needs a strong and effective world bank. that is one of the reasons why these issues have been such a concern. we saw a record 650 billion, vital for the world and a lot of attention in making sure that the imf can be effective, providing support going forward.

>> that transitions us to our next guest. let's continue this with the director of the policy center at boston. eric is highlighting that slowing economy. it highlights the need of a strong and trusted imf, world bank, you name it. greg's it is really important that we contain this for the moment so that we can deal with the fact that we are dealing with a global health and global economic crisis that can really move us over a cliff. the word is out on the street. the curtains have been unveiled. this is not necessarily fit for today's purpose. they need some fundamental reform. we cannot do this this week.

we need to work on vaccinating the world and dealing with debt relief. we cannot kick the can down the road. these institutions need to be reformed. >> it will not get done this week. maybe you can give our viewers a little bit of insight. you can talk about what really drives this, the people who really drive it here. the nuts and bolts of what gets done on the ground is done by a whole bunch of other people. i am wondering how much we can look to them for a degree of efficacy and accountability. >> yes. these are the most senior full-time people that were here on a year and -- in and year out business. this is where the shareholders come together.

the financial ministers of every country in the world who are represented on the board of the imf and the world bank. we are in the middle of a situation where we need to vaccinate the world. only 2.5% of people in the poorest countries are vaccinated right now. we don't have enough liquidity getting to developing countries and we need to deal with debt relief. those are the things that are supposed to be dealt with this week. we got distracted. those people make the bigger decisions and set the big agenda . you need integrity from top to bottom but this is the week where the minister should be taking over and taking the lead. >> you say there is not enough liquidity going to those that need it in the developing world. we are in a world that i thought

was awash with cash. is there no private market answer to this at the moment? how relevant are these institutions? in terms of lending and fostering growth? >> there are 70 or 75 countries that can go to the market at eight, nine, 10%. they hardly have enough physical space to be able to attack the virus. if you are looking at eight or 9% over a short timeframe, it is really tough to cough up that kind of cash. a country like nigeria spent 90% of every tax dollar last year, sending it back to external creditors. that is not enough to attack the virus and mount a recovery. >> i am hearing and echo.

i am hearing myself and trying to speak to you at the same time. you also talk to us about debt relief. talk to us about rising global debt levels. it should be the time to pay down some of those debt levels. do you not see that? >> i do not. the imf shows that the poorest countries increase their debt levels over the past 1.5 years because they are too afraid to go to the imf. the imf puts some real draconian austerity measures on countries that get their financing. countries did not want to go through that in the middle of the crisis. they would point to us and said you spent $17 trillion. we can't borrow from you to starve ourselves. they tightened their belts and went to the capital markets where they can with this more

expensive financing. they have taken on a lot more debt. they estimate about $600 billion in distressed debt just this year. it will be tough to pay it back. the g20 is set to repeal the debt service suspension. just as we are about to appeal this, if because of all of the inflation fears and the tightening we may have had in the industrialized countries, we are not only going to see more cost of finance and less finance going to developing countries, we are going to see what we saw at the beginning of 2020.

a reversal of capital flows and balloon up that debt. then we have a real crisis on our hands and we are going to need a reform to that. >> that brings us back to leadership and help leadership is chosen here. you have institutions that are arguably designed for the most part to aid emerging markets. yet, they are largely led by people from developed nations. that is because of the money they paid into those institutions. is it time to break that cycle? >> it is time to have merit-based recruitment and decision-making processes throughout the imf and the world bank. it has long been a secret handshake where the head of the world bank is always someone from the united states and the head of the imf is always

somebody from your. regardless of their merit, these missions have long been plagued with scandals over the last 50 plus years. there was some movement toward that in the world bank but that got broken up. in addition to the leadership choices, decision-making is also skewed. countries have yet to vote based on the size of their economy and how it has grown relative to that. the united states has veto power on all major decisions. china is about to be the largest economy in the world and it is clearly the largest trading and investing economy in the world. if we don't open up the decision-making processes without countries to feel like they have a say, some of them are going to exit and some of them will create their own. the chinese created the asian

infrastructure bank and a host of other institutions. >> we could speak to you for so much longer. ♪

>> today we are focused on world bank's, the imf and all of the talks about reform.

monetary policy is getting adjusted and you have these institutions right in the middle of it. -- >> everything is on a two second delay. shery ahn nails this every time. she talks about the pressure on mf currencies. this is the debt outflows here. you are seeing some pretty big outflows here. that is where the value of the etf really starts to come down. you wonder if this could be something more fundamental or maybe sinister going on underneath that. damien, what do you make about some of the pressure we have seen of late? >> good afternoon.

it is definitely staying short. the first is obviously growth differentials. it is the inflation impulse. finally, closer to home, it is this term for expansion we are seeing. em currencies perform worse. i think that is what markets are concerned about. >> taylor said it best. i am curious if you could talk a little bit more about the debt side of the equation here. there has been a lot of talk about interest rates being so low. some of these nations have the ability to borrow on their own without going to the imf but we have not seen u.s. dollar denominated borrowing and i am wondering if that is even a

possibility without the explicit backing of the world bank? >> i agree with you, a lot of that debt has been issued domestically. not all markets have a domestic debt market they can issue. most of those markets, you have the central bank in that secondary market. creating money out of nothing. there is a lot of that going on. you take that and couplet with the fact that the tax revenue is rising and uc contingent liabilities. bank holdings of government debt is surging. it is no big mystery as to why you are seeing the u.s. debt capital markets really not that open. >> talk to us about whether or not there is eventually the appetite. who are the buyers in the

emerging-market? > let's be clear, if you have a lot of markers that operate on the fringe here. that is what they have done. if you take a step back and look at where we are, it is about levels and trends. the trend is not declining that much any longer. you see policy tightening, broad and emerging markets but we are also seeing financial conditions tightening in the u.s.. i think that is the real concern here. if financial conditions continue here in the u.s., you are going to see spreads rise more and it is those spreads that are going to drive the policy yield.

i think that is the real risk here. that is what markets are looking at. a lot of emerging-market countries, they have yet to issue their full budget for the full year. >> always smart. stay with us, final thoughts are next, this is bloomberg. ♪

>> we have some said breaking news for you. transformers, my little pony, many a children's toy out there, the ceo, brian goldner dies at 6

56. they are announcing his passing. a loss to the world of toy making, a loss to the world of executives in the united states. a man who had been with the business for decades. this is bloomberg. ♪

this halloween, xfinity rewards is offering up some spooky-good perks. like the chance to win a universal parks & resorts trip to hollywood or orlando to attend halloween horror nights. or xfinity rewards members, get the inside scoop on halloween kills. just say "watch with" into your voice remote for an exclusive live stream with jamie lee curtis. a q&a with me! join for free on the xfinity app. our thanks your rewards.

announcer: from the heart of where innovation, money and power collide -- in silicon valley and beyond, this is bloomberg technology with emily chang.