NEW DELHI: Ahead of her departure to Marrakech for the annual meeting of the World Bank and the IMF, FM Nirmala Sitharaman took stock of the progress on multilateral development bank (MDB) reforms, a key item on India’s priority list during its presidency, with heads of several global agencies listing out the measures they have initiated to boost lending and revise their mandate.
The fourth and final meeting of the G20 finance ministers and central bank governors is also scheduled in Morocco later this week, where India will seek to ensure that the issues that were part of the New Delhi Declaration, including cryptocurrency regulation and debt restructuring of vulnerable countries, along with MDB reforms, are pushed through, especially as leaders are due to meet on November 22 for a virtual summit. India is also expected to push for more capital in MDBs in the coming years, which is seen to be a key element of the reform plan charted out by the independent expert group, whose second report will be made public this week.
“There was broad-based support on the ingredients of the report, particularly the plan to set up a platform for countries, having a robust project pipeline, optimising their balance sheets, harnessing private capital and ways to ensure that MDBs work as a family,” said a source familiar with the deliberations. Larry Summers and N K Singh, the co-convenors of the independent expert group that has worked out a revamp plan, also attended the meeting that took place on Friday.
“Even as MDB reform has gained prominence, MDBs have been actively pursuing the ‘better, bolder, bigger’ agenda. So far, most of the focus has been on implementation of capital adequacy framework (CAF) reforms, with much more uptake after the initial hesitation. Even the World Bank, which was initially skeptical, has now embraced the CAF reforms. Although there is still more to do, there is a benefit from a more coordinated approach including on callable capital and preferred creditor,” said an official.
The MDB Climate Leaders Group has also emerged as an important forum of cooperation amongst MDB on climate action. The group is now working on an important initiative to step up coordinated support on priority climate goals through country platforms to be announced before COP28, sources said.
As reported by TOI last week, the World Bank has sought permission from its board of governors for the reform plan, which will be taken up in Marrakech. The idea is to expand the mandate beyond poverty reduction and shared prosperity, and to also bring climate action and other global public goods on the agenda.Several others have moved ahead, too. For instance, the African Development Bank has initiated steps towards balance sheet optimisation, hybrid capital and recycling special drawing rights.
The Asian Development Bank has also announced measures that are aimed at unlocking $100 billion in new financing capacity over 10 years along with a bigger lending mandate. The European Bank for Reconstruction and Development is also pursuing reforms together with a capital increase.
