One of the strong outcomes of the Indian Presidency is taking forward the implementation of the Capital Adequacy Framework (CAF) for MDBs that could yield $200 billion in additional funding over a decade.
India’s G20 Presidency is ‘highly hopeful’ that proposed reforms in Multilateral Development Banks (MDBs) will get the backing of the leaders of the powerful grouping this week-end, economic affairs secretary Ajay Seth said on Friday.
“There has been very rich and intense discussions both on strengthening multilateral development banks and as well as other institutions,” Seth said ahead of the Summit of G20 Leaders. “We are highly hopeful that the discourse over the past nine months will get positive consideration from the leaders.”
One of the strong outcomes of the Indian Presidency is taking forward the implementation of the Capital Adequacy Framework (CAF) for MDBs that could yield $200 billion in additional funding over a decade. India’s goal is to secure continued and sustainable access of low-cost concessional finance for low and middle-income countries from the MDB ecosystem to achieve their goals under Agenda 2030.
India and the United States have been working closely for the implementation of CAF by MDBs through greater leveraging of capital and mobilisation of resources from the market. After fears of some countries that they would have to contribute more to MDBs were dispelled, the CAF reform has been accepted by G20 countries.
Through the Independent Expert Group report and its recommendations, India has used the opportunity provided by the G20 Presidency to effectively articulate the perspectives of the Global South on the subject of MDB reforms. Of course, at the July Gandhinagar meet, finance ministers and central bank governors while taking note of the group’s report, did not endorse it.
MDBs have been encouraged to discuss the scope for implementing the group’s recommendations within their respective governance frameworks. This can significantly enhance the MDBs’ strength in addressing a diverse set of global challenges.
Since the pandemic, there has been a realisation that MDBs need to integrate global challenges such as climate change and pandemics within their core development mandate.
However, such integration cannot happen with just their existing financial resources. India aims to take the opportunity provided by the G20 Presidency to better reflect the needs of the Global South in the larger global conversation on MDB reforms.
The Expert Group led by NK Singh and Larry Summers in its first report said an additional $3 trillion in annual spending is needed by 2030 for SDGs and other global challenges. This includes $1.8 trillion for climate action, a four-fold increase in adaptation, resilience and mitigation compared to 2019. About $1.2 trillion in additional spending is needed to attain other SDGs, including a 75% increase in health and education.
It said MDBs should provide an incremental $260 billion of the additional annual official financing, of which $200 billion in non-concessional lending.
Source:financialexpress.com