MDB reforms: Panel in for tough balancing act

NEW DELHI: When the expert group on strengthening multilateral development banks (MDBs), such as the World Bank, holds its first in-person meeting later this week, it will begin a fine-balancing act in its bid to ensure that the interests of all stakeholders are kept in mind while preparing these entities to deal with modern-day challenges.

"The expert group must be cognisant of the multiplicity of challenges which will need to be fully reckoned and reconciled in the report. The expert group would face the challenge of seeking to harmonise several developments and multiple strands of concerns to come up with hopefully a report which will be positive and meet the contemporary expectations," said N K Singh, the co-convenor of the panel along with Harvard professor and former US treasury secretary Larry Summers.

The group was constituted by the finance ministry last week, following discussions at the meeting of FMs and central bank governors from G20 countries in Bengaluru last month. For India, an agreement on MDB reforms could be a major success during its G20 presidency, given that PM Narendra Modi has already flagged it as a priority.

But before that, the nine-member group has to deal with addressing the concerns of the poor countries, especially those from Africa, which have seen a fall in per capita income, rise in poverty levels, following the pandemic. At the other end of the spectrum is middle income and developing countries, which need low-cost resources to deal with the impact of climate change, especially when the rich nations have failed to provide the promised funds.

Singh acknowledged that there are different positions, while others - including G20 sherpas - that TOI spoke to made it clear that the current level of capital with the World Bank was not sufficient to meet the additional funding requirements, something that a report prepared following the agency's executive directors meeting has also pointed to.

In the past too, there have been efforts to prepare a road map - be it through the capital adequacy framework report or the 2018 report of the Eminent Persons Group on global financial governance, chaired by Singapore senior minister Tharman Shanmugaratnam, who is among the members of the new expert group.

The latest initiative comes at a time when there is fresh push through the Bridgetown Initiative, a proposal to reform development finance, especially the way rich countries help the poorer ones to deal with climate change, as well as French President Emmanuel Macron's initiative for a conference this June for "a new financial pact with the South".

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