G20 expert group presents roadmap for ‘bigger, bolder, better’ MDBs

To meet the objective of having bigger, better and bolder multilateral development banks, the G20 independent expert group on the subject has laid out a vision where, by 2030, MDBs channel support through multi-year country platforms, process operations in half the time, work together as a system on regional and global approaches to global public goods, triple lending volumes, quintuple private finance mobilisation, expand its use of guarantees, ensure simplified financing mechanisms, and provide automatic liquidity through debt and loan contracts in case of a disaster. The independent expert group, which was led by former US treasury secretary Lawrence Summers and veteran Indian policymaker and chair of the 15th Finance Commission NK Singh, submitted volume two of its report, titled The Triple Agenda: A Roadmap for Better, Bolder and Bigger MDBs, to the ongoing fourth G20 finance ministers and central bank governors meeting in Marrakech during the annual meetings of World Bank and International Monetary Fund. By 2030, IDA replenishments over a three-year period should reach $279 billion, requiring around 0.04 percent of IDA donor gross national income in annual contributions.” Bolder MDBs Suggesting that risk was a major reason for limited private investments in EDMEs, the expert group has said that MDBs can play a role in partnering governments to mitigate and allocate this risk in global capital markets, particularly sovereign credit risk and policy/regulatory risk. These include how MDB participation in itself reduces risk for private partners by ensuring standards, improving government policy and regulatory decisions and planning projects better; strengthening of GIF to service all MDBs and client countries; making the global emerging markets database, a credit performance database, more transparent; offering sovereign and project guarantees; empowering the multilateral investment guarantee agency which has “effective and standardized insurance products, a globally diversified portfolio, the ability to partner with sovereigns, municipalities, state-owned enterprises and the private sector, authority to work across the MDB system, a demonstrated track record, and excellent access to private reinsurance”; facilitating systematic and comprehensive support for local currency risk management; and having disaster and pandemic contingency clauses in debt contracts as other measures to manage risk and made MDBs bolder.