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US Appreciates Panel’s Report On Bolstering Multilateral Development Banks

The initial vote on the child sex trafficking bill sparked outrage among observers with shouts of disapproval and emotional reactions echoing from the gallery. (Photo: iStock)
The initial vote on the child sex trafficking bill sparked outrage among observers with shouts of disapproval and emotional reactions echoing from the gallery. (Photo: iStock)

The United States (US) has praised the G20 independent expert group’s report on bolstering multilateral development banks (MDBs), particularly its emphasis on broadening banks’ mandates to cover global public goods, improving operating systems by altering culture, incentives, and risk-taking preferences, and ensuring greater public sector involvement. US Treasury Secretary Janet Yellen supported the prompt implementation of the capital adequacy framework recommendations at a press conference in Gandhinagar, where she is going to attend the 3rd G20 finance ministers & central bank governors (FMCBG) conference, despite delaying a decision on a capital increase for the time being.

MDB Reform Is The Top Priority

MDB reform has become a top priority as a result of several variables coming together. In actuality, there is a push to broaden the World Bank’s mandate beyond eradicating extreme poverty and fostering shared prosperity to include tackling global issues like the climate problem. A G20 independent expert group on MDB reform has been established, and it is being led by Larry Summers, the ex-US Treasury Secretary, and veteran Indian politician and chairman of the 15th Finance Commission, NK Singh. The World Bank is currently midway through its road map of evolution, which aims to review its goals, operational procedures, and financial situation. Ajay Banga, the Bank’s new president, has prioritized change on his agenda.

The MDB expert panel has finished its first of two reports, which will be considered at the Gandhinagar meeting. To set the scene, Yellen noted that before the World Bank and International Monetary Fund annual meetings a year before, the US had partnered with other shareholders in calling for an evolution of the MDB structure. The World Bank has been revising its operational model and mission statement. Additionally, we are collaborating with the World Bank and regional development banks to put policies in place that will more effectively use the resources they already have. Over the next ten years, our balance sheet changes at the World Bank will responsibly increase the bank’s lending capacity by up to $50 billion.

Focus On Integrating Global Public Goods

According to Yellen, the MDB system can free up $200 billion for the upcoming ten years merely from the actions that are already being taken or are being discussed as part of what is now known as balance sheet optimization. Yellen stated that MDBs must increase their private capital mobilization rates because they could not adequately address the enormous difficulties with just public finance. As a “useful input” to the aforementioned agenda, she commended the most recent study of the MDB expert panel of the G20 at this point. “I am happy with the report’s focus on integrating worldwide public goods into the MDBs’ objectives, as well as its focus on improving the operational model of the organizations through adjustments to culture, incentives, as well as risk appetite. To improve the efficiency of the entire system, I also support the call for far more determined private sector engagement.

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