Third G20 FMCBG meeting fails to endorse report on reforming MDBs

The Third G20 finance ministers and Central Bank Governors (FMCBG) meeting in Gandhinagar failed to “endorse” the report on reforming the multilateral development banks (MDBs) co-authored by NK Singh and Larry Summers, signalling that the key recommendations of the independent expert group may not be agreed upon during India’s G20 presidency.

“We are disappointed that the recommendations of the MDB reforms report were not endorsed in the chair’s summary released in Gandhinagar. It was only taken note of,” a senior G20 delegate of India said, requesting anonymity.

The FMCBG meeting, which had to satisfy with a chair’s summary rather than a joint communique due to differences on the Russia-Ukraine war said: “We take note of Volume 1’s recommendations and the MDBs may choose to discuss these recommendations as relevant and appropriate, within their governance frameworks, in due course, with a view to enhancing the effectiveness of MDBs.”

While “endorsement” means the members are in agreement with the recommendations made and sends a stronger statement of intent to implement them, taking “note” means members may not be in full agreement with the recommendations, just yet.

The chair’s summary appreciated the efforts of the G20 Independent Expert Group on Strengthening MDBs in preparing Volume 1 of the Report, and said it would “examine” it in conjunction with Volume 2 of the report expected in October 2023 at the sidelines of the annual IMF-World Bank meeting in Marrakech, Morocco.  

NK Singh, co-convenor of the expert group, however, told Business Standard that at this stage an endorsement was not expected. 

“This was not the sense of the discussion that at this stage there will be an endorsement. They (members) need more time. It was given to them without too much time. There are far reaching recommendations. It is normal that each member country would like to study each of these proposals and take some time to come to a considered conclusion. ‘Take note’ is more than enough and this is the appropriate way of going about it.”

In his observations made at a G20 session on international financial architecture at Gandhinagar, Singh had said: “We will present Volume 2 of this report at the Fourth FMCBG meeting. Both reports are independent, but inevitably integral to each other.”

The expert group has recommended that the MDBs adopt a “Triple Mandate” to address eliminating extreme poverty, inclusive growth and the financing of Global Public Goods. 

It has estimated an additional annual spending requirement of $3 trillion by 2030, of which $1.8 trillion represents additional investments in climate action, mostly in sustainable infrastructure, and $1.2 trillion in additional spending to attain other sustainable development goals. 

While $2 trillion of the total $3 trillion is expected to come from domestic resource mobilisation, more than half of the other $1 trillion resource gap could come from private financing and the rest from official financing.

Separately, the chair’s summary “endorsed” the Financial Stability Board’s (FSB’s) high-level recommendations for the regulation, supervision and oversight of crypto-assets activities and markets and of global stablecoin arrangements, signalling greater degree of convergence among members. 

However, it took “note” of the 2023 update of the G20/OECD Roadmap on Developing Countries and International Taxation, signalling existing differences on the matter among member countries. 

“We note the Update on the Implementation of the 2021 Strategy on Unleashing the Potential of Automatic Exchange of Information for Developing Countries by the Global Forum on Transparency and Exchange of Information for Tax Purposes,” it said.

An email sent to the finance ministry seeking a reaction remained unanswered till press time.

The deadlock

• The expert group has recommended that the MDBs adopt a ‘triple mandate’ to address eliminating extreme poverty, inclusive growth 
• It had estimated an additional annual spending requirement of $3 trillion by 2030
• While ‘endorsement’ means the members are in agreement with the proposals made, taking ‘note’ means members may not be in full agreement 
• The deadlock signals that the proposal of the independent expert group may not be agreed upon during India’s G20 presidency