 "Nirmala Sitharaman, N K Singh, Lawrence Summers")
Finance Minister Nirmala Sitharaman has told the G20 expert group on strengthening multilateral development banks (MDBs) that global public goods should not be financed by substituting resources from other focus areas of MDBs, but through additional resource allocation.
Last month, India, under its G20 presidency, constituted the nine-member expert group with Lawrence Summers, president emeritus at Harvard University, and N K Singh, chairperson of the 15th Finance Commission, as co-convenors of the group. The expert group held its first in-person meeting in Washington DC on the sidelines of the World Bank and International Monetary Fund spring meeting.
Speaking with Business Standard, Singh said the members of the expert group agreed with Sitharaman’s proposed approach that not to deflect resources from World Bank’s first two priorities of eliminating extreme poverty, and promoting shared prosperity and focus on raising additional resources for the proposed third goal of creating global public goods. “Sitharaman called the expert group ‘not only knowledgeable but also eclectic’. The group appreciated the finance minister’s visionary approach in transforming MDBs,” Singh said.
Global public goods benefit all citizens of the world and encompass many aspects of lives: From the natural environment, histories and cultures, and technological progress down to everyday devices, such as the metric system. India has been showcasing UPI (Unified Payments Interface) as a success story of digital public good during its G20 presidency.
Singh said Sitharaman held free exchange of views with the expert group, holding that time for incremental changes in MDBs was over and that it was time for transformational changes to augment their lending capacities through multiple innovative ways. “The finance minister also said that the other MDBs also need more ambitious targets and that at present, there is a lack of enough ambition in all their programmes,” Singh added.
The expert group has been entrusted with charting a road map for an updated MDB ecosystem for the 21st century, with milestones and timelines; evaluating various estimates regarding the scale of funding required from MDBs for addressing member countries’ increased financing needs; and developing mechanisms for coordination among MDBs. The committee has been tasked to submit its report by 30 June.
The G-24 group that coordinates the position of developing countries on monetary and development issues in its latest communique during the Fund-Bank meet said the scale of the new ambition and ongoing high cost of addressing multiple challenges highlights the need to substantially scale-up the WBG’s financing capacity. “The WBG should optimise its balance sheets, better leverage existing capital, including from financial intermediary funds, and increase efficiency and lower transaction costs on trust funds. Leveraging existing resources should not necessarily foreclose capital increase in the medium-term, which remains the most powerful mechanism for increasing financing capacity with the lowest risk. We urge MDBs to increase their efforts to discuss and implement recommendations from the G20-convened Independent Expert Panel on Capital Adequacy Frameworks and encourage strengthened communications with credit rating agencies to support methodological revisions that would better factor in MDBs particularities,” it added.
