Finance Ministers and Central Bank Governors (FMCBGs) of G20 nations under India’s Presidency have welcomed the report of the Independent Expert Group (IEG) on strengthening Multilateral Development Banks (MDBs).
FMCBG met for the fourth and final time during October 12-13 under the Indian Presidency in Marrakesh, Morocco on the sidelines of the IMF/WB Annual Meetings. The meeting unanimously adopted the G20 Finance Ministers and Central Bank Governors Communique.
3 building blocks
The IEG, with Chairman of 15th Finance Commission NK Singh and well-known Economist Lawrence Summers, has prepared a two-volume report to strengthen MDBs such as World Bank and International Monetary Fund.
According to a Finance Ministry statement, FMCBGs have noted the need for transformative changes to MDBs’ vision, operating models and financing capacities. The three building blocks that the FMCBGs have urged for consideration are private capital mobilisation, strengthening of financial capacity — including through implementation of capital adequacy framework recommendations and capital increase — and the need for MDBs to work together as a system.
Going forward, they have called for continued work on the recommendations of the report for building better, bigger and more effective MDBs, the statement added.
The communique, adopted in the meeting, highlighted commitment to pursue ambitious efforts to evolve and strengthen MDBs to address the global challenges of the 21st century with a continued focus on addressing the development needs of low and middle-income countries.
The communique reiterated the call by G20 leaders to deliver better, bigger and more effective MDBs by enhancing operating models, improving responsiveness and accessibility, and substantially increasing financing capacity to maximise development impact.
“We re-emphasise the need for an additional push for continued and further impetus for ambitious implementation of the recommendations of the G20 Independent Review of MDBs Capital Adequacy Frameworks (CAFs) within MDBs’ own governance frameworks while safeguarding their long-term financial sustainability,” the communique said.
It further noted the need for regular review of the progress of implementation on a rolling basis, including through engaging with MDBs, subject experts, and shareholders, in line with the G20 roadmap for implementing the recommendations of the G20 Independent Review of MDBs CAF endorsed by leaders.
“We appreciate the ongoing collaboration among MDBs on the timely release of Global Emerging Markets’ (GEMs) data and the launch of GEMs 2.0 as a stand-alone entity by early 2024. We continue to encourage MDBs to collaborate in areas such as hybrid capital, callable capital, and guarantees.
“We appreciate the enhanced dialogue between the MDBs, Credit Rating Agencies and shareholders and encourage continued transparency in the exchange of information and rating methodologies,” the communique said.
Roadmap for reforms
FMCBGs look forward to an ambitious IDA (International Development Association) replenishment to increase financing capacity. They acknowledged the concluding report on the 2020 Shareholding Review of the International Bank for Reconstruction and Development (IBRD) and look forward to the 2025 Shareholding Review.
“We look forward to an ambitious replenishment of the International Fund for Agriculture Development (IFAD) resources at the end of the year by IFAD members. We call upon the IMF and World Bank to report by our next meeting on the work undertaken to support efforts at enhancing domestic resource mobilisation of emerging market and developing economies, considering each country’s circumstances,” the communique said,adding that a review will be undertaken in the next meeting.
