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Efforts to reform Multilateral Financial Institutions gather momentum at G20 Summit

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By Binsal Abdulkader

NEW DELHI, 10th September 2023 (WAM) – The global efforts for reforms into the Multilateral Financial Institutions (MFIs) have gained momentum at the 18th Group of Twenty (G20) Leaders’ Summit in New Delhi.
The New Delhi Declaration adopted by the G20 members, and statements of prominent leaders, including U.S. President Joe Biden, reflected these accelerated efforts targeting MFIs, including the International Monetary Fund (IMF) and World Bank (WB), to make them more inclusive.
New Delhi declaration
The New Delhi Declaration read the G20 is working to deliver better, bigger and more effective Multilateral Development Banks (MDBs) by enhancing operating models, improving responsiveness and accessibility, and substantially increasing financing capacity to maximise development impact.
“We underscore the need for enhancing representation and voice of developing countries in decision-making in global international economic and financial institutions in order to deliver more effective, credible, accountable and legitimate institutions.”
The international finance system must deliver significantly more financing to help developing countries and emerging market economies (EMEs) to fight poverty, tackle global challenges and maximise development impact, said the declaration.
U.S initiative
A White House statement said President Biden rallied G20 partners to agree to collectively mobilise more headroom and concessional finance to boost the World Bank’s capacity to support low- and middle-income countries.
“We are aiming for our joint contributions to deliver a one-time boost to International Bank for Reconstruction and Development (IBRD) equivalent to three times the World Bank’s annual non-concessional lending volume, and to double International Development Association’s crisis lending capacity.”
The statement on Saturday added that this initiative will make the World Bank a stronger institution that is able to provide resources at the scale and speed needed to tackle global challenges and address the urgent needs of the poorest countries.
In an interview with WAM last year, John F. Kerry, U.S. Presidential Envoy for Climate, had sought the developing world’s support in his “battle” to reform MFIs.
The multilateral development banks have always been a key to the ability of many countries to afford new technology or investment and they need new rules and new ability to offer more assistance to the less developed countries, he said.
Excellent opportunity at 20
A senior German official told WAM that the G20 Summit is an excellent opportunity to make International Financial Institutions fit for the 21st century.
“The World Bank and other Multilateral Development Banks (MDBs) need to deliver better and more effectively to meet global challenges, with a continued focus on addressing the development needs of low- and middle-income countries,” said State Secretary Jörg Kukies, Commissioner of the German Chancellor for the G7/G20 Summits.
Germany supports the reform of the global financial architecture to mobilise additional resources for development and global public goods such as climate, biodiversity, and pandemic prevention, he added.
“When we look at the magnitude of the transformation ahead, it is clear that this includes the need to boost private sector investment and crowd-in private capital. The World Bank in particular could be a frontrunner: by advancing the global transformation towards climate neutrality and continuing the fight against poverty,” Kukies explained.
G20 Finance Track achievements
Nirmala Sitharaman, Indian Minister of Finance and Corporate Affairs, said the G20 Finance Track made substantial achievements with regard to strengthening the MDBs to address shared global challenges of the 21st century.
G20 has decided to set up a roadmap for capital adequacy framework of the MDBs, which can potentially yield additional financing headroom of approximately US$200 billion over the next decade, she said at a press conference at the G20 summit venue on Saturday.
The New Delhi Declaration further called on the MDBs to undertake comprehensive efforts to evolve their vision, incentive structures, operational approaches and financial capacities. “So that they are better equipped to maximise their impact in addressing a wide range of global challenges while being consistent with their mandate and commitment to accelerate progress towards Sustainable Development Goals (SDGs).”

Hazem Hussein

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