NEW DELHI: In a boost to India’s position ahead of the G20 summit, the US has backed recommendations for a revamp of multilateral bodies such as the World Bank and IMF. It further said that US President Joe Biden will work with the Congress to provide “supplemental funding request” as Washington sought to strengthen the two multilateral agencies and position them as a counter to China’s “coercive and unsustainable lending through the Belt and Road Initiative”.
“President Biden has been committed to fundamentally reshaping and scaling up the World Bank to more effectively deliver both poverty reduction and inclusive economic growth, while also addressing global challenges from climate to migration to the recovery from Covid,” US national security adviser Jake Sullivan told the media last week. He said that the funding through “highly effective and transparent international financial institutions” wo uld address challenges that the countries are facing.
For India, reform of the multilateral development banks (MDBs) — for which it had set up an independent expert group — is one of the key priorities during its G20 presidency. While US treasury secretary Janet Yellen backed the recommendations in the first report that has been submitted, she indicated that the Biden administration would wait before providing capital. The reform of the MDBs is expected to figure in the joint statement or the outcome document at the end of the G20 leaders’ summit, scheduled for September 9 and 10.
Experts here said that Sullivan’s statement would rally support for the plan, especially with the China factor coming in. They said there is growing fatigue with debt from Beijing, which comes with onerous terms, and the economic problems in China are going to further complicate issues for borrowers.
The independent expert group co-chaired by former US treasury secretary Larry Summers and 15th finance commission chairman N K Singh has estimated that MDBs would need additional shareholder capital of $100 billion to support new lending of $1 trillion over 10 years.
Describing the additional funding from the Congress as “strategically necessary”, Sullivan said it would help concessional funding for the IMF and the World Bank.
“…together, our IMF and World Bank proposals will generate nearly $50 billion in lending for middle income and poor countries from the US alone. And because our expectation is that our allies and partners will also contribute, we see these proposals ultimately leveraging over $200 billion. That is the proposal President Biden will carry with him to Delhi and what he will work with the Congress on to deliver through the supplemental funding request,” he said.
