Development banks can boost lending by $271b: Paris summit
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The Paris summit gathered around two dozen leaders from Africa, China and Brazil to give impetus to a new global finance agenda.
PHOTO: AFP
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PARIS - Multilateral development banks (MDBs) are expected to unlock US$200 billion (S$271 billion) in extra firepower for emerging economies by running their balance sheets more tightly and taking on more risk, world leaders meeting at a summit in Paris said on Friday.
Many of the 40 leaders gathered in Paris voiced concerns that the World Bank and the International Monetary Fund (IMF) were increasingly outdated for tackling challenges like climate change and post-Covid-19 debt burdens of poor countries.
“We... expect an overall increase of US$200 billion of MDBs’ lending capacity over the next 10 years by optimising their balance sheets and taking more risks,” the summit’s final statement obtained by Reuters said.
“If these reforms are implemented, MDBs may need more capital,” it added.
US Treasury Secretary Janet Yellen said in Paris ahead of the summit that efforts to squeeze more lending from the development lenders had to be carried out before considering the possibility of capital increases.
The United States is the largest shareholder of the IMF and World Bank.
The Paris summit, hosted by French President Emmanuel Macron, gathered around two dozen leaders from Africa, China’s prime minister and Brazil’s president to give impetus to a new global finance agenda.
At the summit, wealthy nations finalised an overdue US$100 billion climate finance pledge to developing countries
The summit aims to create multifaceted road maps that can be used over the next 18 to 24 months, ranging from debt relief to climate finance.
Many of the topics on the agenda took up suggestions from a group of developing countries, led by Barbados Prime Minister Mia Mottley, dubbed the Bridgetown Initiative.
“There is the political consensus that this issue is bigger than each of us and we have to work together and multilateral development banks will have to change how they do business and that is accepted,” Ms Mottley said at the summit’s final panel.
“We leave Paris not with simply speeches, but a commitment to get down into the granular details to make sure that what we agree here can be executed.”
Leaders were also hoping to reform post-war financial institutions and free up funds to tackle climate change by getting consensus on how to promote a number of initiatives struggling in bodies like the Group of 20, IMF, World Bank and United Nations.
The US$100 billion pledge falls far short of poor nations’ actual needs, but has become symbolic of wealthy countries’ failure to deliver promised climate funds. This has fuelled mistrust in wider climate negotiations between countries attempting to boost carbon dioxide-cutting measures.
“If we can’t shape the rules in this time like others before, then we will be accountable for what potentially can be the worst reality of mankind,” Ms Mottley said. REUTERS
