How to have ‘bigger, bolder, better’ MDBs? G20 expert panel presents roadmap

The G20 expert group on strengthening multilateral development banks (MDBs) has presented a 30-point roadmap for “bigger, bolder, better” versions of them. 

The panel wants these institutions to shift from an approach of individual projects and prioritise programmes identified by national governments with sectoral focus and long-term transformation plans.

“Governments have the primary responsibility for ensuring that the enabling conditions for private investment are sound, transparent and stable over the horizon of investors. They must also help address multiple coordination failures among domestic and international stakeholders, public and private, to unlock and scale up investment for urgent priorities such as rapid energy transition, building resilience to climate change, tackling fragility, and closing major gaps in reaching the SDGs,” said the report. 

In the second part of its report, the panel, co-convened by former US Treasury Secretary Larry Summers and India’s 15th Finance Commission Chairman NK Singh, proposed that Multilateral Development Banks (MDBs) should prioritise assisting countries in establishing and implementing “country platforms.” These platforms are voluntary mechanisms established by respective governments to encourage collaboration among development partners, based on a common strategic vision and shared priorities.

This second volume of the Independent Expert Group on Strengthening Multilateral Development Banks is currently under discussion at the ongoing meeting of G20 finance ministers and central bank governors in Marrakech. In addition to suggesting that MDBs align more closely with the development goals of individual nations and jointly create multi-year programs, the expert group also advocated for placing greater emphasis on involving the private sector in MDB operations and significantly increasing MDB funding.

In the initial volume of the report presented at the July meeting of G20 finance ministers and central bank governors, the expert group outlined a threefold agenda for reforming MDBs. This included tripling annual sustainable lending levels to $390 billion by 2030, adopting a triple mandate to eradicate extreme poverty, promote shared prosperity, and contribute to global public goods, as well as expanding and modernizing funding models to attract a wider range of investors through flexible and innovative means.

In the Delhi Declaration, the G20 Leaders recognised a need for a “big push on investments” to deliver on national development priorities, to respond to global challenges and to meet agreed international objectives.

“MDBs must reduce processing time by half across the first stages of the project cycle. MDBs should release their baseline processing time from concept note to first disbursement publicly, commit to reducing this time by 50% and report updated and comparable figures each year. There are a number of measures that help MDBs achieve this goal without jeopardising the rationale of why these processes were set up in the first place,” the report said.

The high-level G20 panel moots trebling lending limits of multilateral banks by 2030, which includes attracting private investors and introducing pooled portfolio guarantees.

“Country platforms are a natural entry point for MDBs to work together better as a system, but their collaboration should be deepened in a number of areas, particularly around global and regional priorities. MDB collaboration has long been held back by lack of incentives and conflicting requirements from shareholders. This culture can best be reformed throughinstitutional mechanisms of dialogue and joint strategy formulation by leadership teams at the highest level. Going forward, the ambitions set out for the MDB system will be much harder to achieve without collaboration to exploit potential synergies, cost savings and efficiency gains for their clients. Some early wins can come from the use of shared diagnostic tools, mutual recognition of standards and setting up shared co-financing and project preparation platforms,” the report added.