New Delhi: India Saturday made a case for reform in multilateral development banks (MDBs) to allow them mobilise additional funds to help developing countries meet their development needs and address global challenges.”It is critical that the financing requests made to MDBs are met with speed and agility.This will require reforms both at operational levels as well as identifying new sources of finance,” finance minister Nirmala Sitharaman said in her address at the third Voice of Global South Summit hosted virtually by India. She said fresh capital infusion should remain an active option for consideration of MDB boards.
Sitharaman also called for measures for balancesheet optimisation and financial innovations.
“On private capital mobilisation, MDBs need to engage with credit rating agencies and explore how to better incentivise the flow of private capital for development financing,” she said. The G20 during India’s presidency had set up an Independent Expert Group, headed by 15th Finance Commission chairman NK Singh and former US treasury secretary Larry Summers, to suggest MDB reforms.
Sitharaman expressed concern over inadequate access to development finance hindering developing economies from achieving their development goals. Recent reports showed that implementation of many sustainable development goals (SDGs) in developing economies is stagnating, with some indicators even regressing, she said. The SDG financing gap is estimated to be $4 trillion annually for developing countries, she said, adding that the Global South is affected disproportionately by global uncertainties. “To accelerate progress on SDGs, there is an urgent need to address the $4 trillion dollar financing gap,” she said, while seeking ideas for South-South cooperation of developing countries in scaling up financing from all sources.
Growth remains the best antidote to many economic and social challenges, Sitharaman said. “Our priority should be a people-centric growth path that empowers the most vulnerable and marginalised to participate in the development journey,” the finance minister said.
