An independent experts group formed by G20 nations under India’s presidency has recommended that multilateral development banks (MDBs) like World Bank and IMF need an additional spending of $3 trillion by 2030 to meet future global challenges.
Of this, $1.8 trillion should be used for climate action and the rest to meet other sustainable development goals, including health and poverty alleviation goals.
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“Radically reformed and strengthened MDBs are essential to address the immense global challenges in today’s world. The welfare of billions of people and the health of the planet are under threat,” the panel said in the first part of its report, made public on Thursday. The second part will be submitted in October.
The panel is headed by the 15th Finance Commission chairman NK Singh and former Federal Reserve chairman Larry Summers. Other notable members include Maria Ramos, chairperson of mining giant AngloGold Ashanti and former deputy Prime Minister or Singapore Tharman Shanmugaratnam.
In its report, the panel said that the MDBs need to adopt a ‘triple agenda’ of eliminating extreme poverty, boosting shared prosperity, contributing to global public goods, tripling sustainable lending levels by 2030 and creating new funding mechanisms.
“Additional spending of some $3 trillion per year is needed by 2030, of which $1.8 trillion represents additional investments in climate action, a four-fold increase compared to 2019,” the report stated.
It stated that upto $500 billion of this should come from the private sector and an equivalent amount from other external sources.
“Effective implementation of the triple agenda requires important changes in the ways that MDBs operate. Individually and collectively, MDBs must become effective agents in all developing countries for integrating the development and climate agendas,” the report stated.
It said that the MDBs need to work more closely with governments and the private sector to reduce, share and manage risks and thereby bring down the cost of capital.
“They must change their culture, become more client responsive, and take more risk. Timelines for project preparation should be shrunk and procedures rationalised. They must also increase the scale and nature of their activities,” it said.