NEW DELHI: The independent expert group on strengthening multilateral development banks (MDBs) is discussing creation of a window or special purpose vehicle (
) within entities, such as the World Bank, to meet climate and transboundary financing of low and middle-income countries. This follows the recent Modi-Biden talks on the issue.
The group, which will submit its report to finance minister
over the next few days, is looking at the option to ensure that the additional funding needs of countries such as India, Indonesia and Brazil are met without impacting the flow of concessional finance to low-income countries in Africa and other parts fighting to reduce poverty.
Sources told TOI that the discussions are in line with the decision between the two leaders, which was reflected in the joint statement. “By the G20 Leaders’ Summit in New Delhi, the United States and India will work together to secure G20 commitment to create a major new dedicated pool of funds at the World Bank to deploy concessional lending for global challenges, and to enhance support for crisis response in International Development Association recipient countries,” it had said.
The expert group co-chaired by former US treasury secretary Larry Summers and 15th Finance Commission chairman
Singh was set up following a meeting of G20 finance ministers and central bank governors in Bengaluru earlier this year. “The multilateral development banks are in a comfort zone of risk aversion. The prevailing ethos accentuates this. A culture change in attitudes, the methods and procedures is central to meaningful restructuring,” Singh told TOI, when contacted.
The panel met US treasury secretary
last week as it worked to finalise its report for the next meeting of G20 FMs in Gandhinagar this month. Sources said there was discussion around the work culture and ethos of the multilateral development banks and getting them out of their comfort zone to harness private capital.
While ensuring that the risk-reward balance is maintained, the main thrust of the discussions was to ensure how more capital can be made available to middle-income countries to deal with climate challenges at a time when rich nations are seen to have not met their share of the commitment. This is to be done in a manner that the main focus of agencies, such as the World Bank, on fighting poverty is not affected.