The independent expert group on strengthening multilateral development banks (MDBs), set up under India’s G20 presidency, has completed its first report and will submit it in time for the third finance ministers and central bank governors (FMCBGs) meeting in Gandhinagar on July 17 and 18.
This report will feed into the eventual declaration during the G20 leaders’ summit in September in New Delhi.
Led by former US treasury secretary Larry Summers and veteran Indian policymaker and the 15th Finance Commission chairperson NK Singh as co-conveners, the group’s report addresses its wide-ranging terms of reference. These include questions related to the vision, mandate, operating modalities, financial requirements and resource mobilisation mechanisms of MDBs, given new global challenges such as the climate emergency, pandemics, fragility and conflict. The group is understood to have expanded the definition of these transboundary challenges to include energy, water and sanitation.
“The expert group has completed its first report. It had been asked to do so by June 30 and this target has been met. The report will be submitted to Indian presidency over the next few days,” Singh told HT during a visit to Washington DC on Sunday.
The group will meet in person in Delhi in the third week of September and finalise its second report. This will be submitted to the fourth FMCBG meeting on the sidelines of the annual meetings of the International Monetary Fund and World Bank in Morocco’s Marrakesh in mid-October. “This too shall happen under the Indian G20 presidency, which ends on November 30,” Singh said.
{{/usCountry}}The group will meet in person in Delhi in the third week of September and finalise its second report. This will be submitted to the fourth FMCBG meeting on the sidelines of the annual meetings of the International Monetary Fund and World Bank in Morocco’s Marrakesh in mid-October. “This too shall happen under the Indian G20 presidency, which ends on November 30,” Singh said.
{{/usCountry}}The expert group, in its first report, has considered past initiatives at MDB reform, including the ongoing evolution road map prepared by the World Bank’s executive directors and discussed by the bank’s development committee during the spring meetings earlier this year.
This road map suggested expanding the remit of the bank from the twin goals of ending extreme poverty and boosting shared prosperity to doing so by “fostering sustainable, resilient and inclusive development”. This, it said, would deepen the bank’s commitment to addressing a third set of global challenges, particularly the climate crisis, pandemics and health security, and fragility and conflict.
The expert group is understood to have taken a clear and considered view that while the expansion of the mandate is necessary, it requires a “delicate balancing act” so that resources meant to address the twin goals aren’t diverted because it will cause great hardship to the poorer parts of the world that have, in recent years, seen a spike in poverty and inequality.
On the question of financing, the group’s first report will examine the question of adequacy of finance for MDBs and how the banks can responsibly meet the financial challenges an expansion in their mandate will require. The report will offer a detailed assessment of how it can do so through the responsible leveraging of its current balance sheets, how it can secure and harness private capital, and how shareholders can play a role in the recapitalisation of banks.
The report has taken into account the various estimates that have been proposed to address transboundary challenges. It will also address the issues of concessional finance by the International Development Association, which is a part of the World Bank Group and provides support to poorer countries, and the International Bank for Reconstruction and Development, also a part of the bank that provides financing to middle income countries. The group’s second report will go into further detail on the modalities of private capital mobilisation and innovative approaches that can be adopted.
In addition, given the fact that there are 14 MDBs, the group’s first report also addresses the issue of bringing “greater coherence” into the family of MDBs, all of which have their distinct matrix of governance structures, shareholding patterns, and decision-making processes. “Yet, bringing about coherence and symmetry will optimise final outcomes and this is an area the expert group will seek to address,” Singh said.
Besides Summers and Singh, the independent expert group includes Singapore’s senior minister Tharman Shanmugarathnam, former director general of the South African national treasury Maria Ramos, former governor of the Central Bank of Brazil Arminio Fraga, London School of Economics academic Nicholas Stern, former World Bank chief economist Justin Yifu Lin, former World Bank Vice President and current dean of the Fletcher School at Tufts University Rachel Kyte, and former executive secretary of the Economic Commission for Africa Vera Songwe.