Marrakech (Morocco): A high-level group set up to suggest measures to strengthen multilateral development banks (MDBs) has proposed greater reliance on private capital and use of varied financial instruments and simplification of processes to cut delays and achieve greater working cohesiveness among the lenders.
The group was set by the G20 under India’s presidency and is headed by former US treasury secretary Larry Summers and India’s 15th Finance Commission chairman NK Singh.
“The second volume of the report, titled ‘Better, Bolder and Bigger MDBs’, suggests several steps under these themes. For example, to make them better, the group has suggested simplifying processes to reduce the time taken to 12 months from about 24-26 months,” Singh said on Wednesday.
He was addressing the global meeting of the emerging markets forum on the sidelines of the International Monetary Fund and World Bank annual meetings. The report will be released later this week.
Singh said there can be greater symmetry in the working of the MDBs.
Noting that MDBs are risk averse, he said they can take a little more risk within their existing framework to raise hybrid capital and blended finance. He said the second volume details how the MDBs can harness private capital, including managing forex fluctuations and regulatory framework.
The core measure suggested in the first volume of the group is to more than triple the volume of lending to $400 billion from $120 billion now.
Singh said the objective is to enable $1 trillion of funding every year, with $500 billion coming from concessional finance and $500 billion from private capital.
He said many MDBs had already begun to implement the recommendations.
