Banking News

G20 panel moots trebling lending limits of multilateral banks by 2030

Marrakech (Morocco): A high-level expert group set up by the G20 under India’s presidency has proposed a 30-point roadmap to reform multilateral development banks (MDBs) and triple their lending by 2030, which includes attracting private investors and introducing pooled portfolio guarantees.

The Independent Expert Group headed by former US treasury secretary Larry Summers and India’s 15th Finance Commission chairman NK Singh called for urgent and strong action to scale MDBs to make them “fit for purpose” by 2030 in part two of its report.

“There is a compelling case for tripling MDBs’ sustainable lending limits by 2030,” said the report titled ‘The Triple Agenda: A roadmap for bigger, bolder and better MDBs’.

It will be presented to the G20 Finance Ministers and Central Bank Governors meeting on Friday.

ET has seen the report.

It has suggested introducing new instruments – pooled portfolio guarantees and hybrid capital – and inclusion of new investors into the MDB capital stack as part of steps to diversify the sources of capital.The report said reforming the MDB agenda and scaling them appropriately are urgent issues requiring action now.”Delay is dangerous. Weak or slow reaction is neither more practical and realistic, nor less risky,” it said, outlining a road map for rapid implementation of MDB reforms.

The first volume of the report, submitted to the G20 in July in Gandhinagar, had recommended enhancing MDBs’ sustainable level of own-account non-concessional finance to $300 billion annually.

The second volume focuses on the changes that will be needed to implement the G20 Leaders’ vision of a strengthened MDB system.

The target is to triple MDB financing to $390 billion annually – $300 billion non-concessional and $90 billion concessional – by 2030 and by opening up opportunities to non-government investors such as sovereign wealth funds, foundations, impact investors and businesses contributing funds as part of their corporate social responsibility (CSR) programmes.

It has also recommended establishing a pilot Global Challenges Funding Mechanism (GCFM) as a platform to allow investors wishing to provide additional resources for priority goals that can be leveraged by MDBs for scale and impact.

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