G20 experts urge 'inescapable' capital increase for development banks

[Gunnar Larson]

Discussions on reforming the World Bank have typically centered on making
the most of existing resources — U.S. Treasury Secretary Janet Yellen’s
squeeze-the-lemon approach — and enticing more private sector investment,
an even more obvious approach now that former Mastercard CEO Ajay Banga is
in charge of the bank.

But there’s one question looming quietly but large in the wings: Whether to
give the bank more money, i.e., a capital increase. Many experts say
wealthy shareholders will have to put up more if they want to stare down
the twin challenges of poverty and climate change, but so far talk has
focused on billions of additional dollars.

Now, apparently, we’re talking trillions.

Nine experts, including former U.S. Treasury Secretary Lawrence Summers,
were tasked by the Indian presidency of the Group of 20 leading economies
to outline a road map for reforming institutions such as the World Bank.

In a lengthy report obtained by my colleagues Vince Chadwick and Shabtai,
the experts say that achieving the bank’s proposed “triple mandate” —
eliminating extreme poverty, increasing shared prosperity, and boosting
global public goods such as climate and pandemic prevention — will require
an additional $3 trillion in available capital per year by 2030.

The experts’ report, which backs the ongoing reform efforts, also says
multilateral development banks have to get better at drumming up private
capital. “Today, MDBs only mobilise 0.6 dollars in private capital for each
dollar they lend on their own account,” the G20 authors write. “They should
aim to at least double this target.”


https://www.devex.com/news/g20-experts-urge-inescapable-capital-increase-for-development-banks-105857
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