US welcomes expert panel report to strengthen MDBS

WASHINGTON: The United States (US) has welcomed the report of the G20 independent expert group on strengthening multilateral development banks (MDBs), including its focus on expanding the mandate of banks to include global public goods, making their operating systems more responsive through changes in culture, incentives and risk-appetite, and ensuring greater public sector engagement

- Prashant Jha

While refraining from committing to a capital increase just yet, US treasury secretary Janet Yellen, speaking at a press conference in Gandhinagar where she is attending the third G20 finance ministers and central bank governors (FMCBG) meeting, also supported the swift implementation of the capital adequacy framework recommendations. But, she added: "I believe that e should only explore capital increases after considering the reforms that I laid out along with those in the report. We should build better banks, not just bigger ones." Capital increase refers to the enhanced financial commitment by shareholders to banks to meet their growing needs.

Several factors have come together to make MDB reform a pressing agenda. Substantively, there is an effort to expand the World Bank's mandate from eliminating extreme poverty and boosting shared prosperity to addressing transboundary challenges including the climate crisis. Under the Indian presidency, the G20 has set up an independent expert group on MDB reform, which is led by former treasury secretary Larry Summers and veteran Indian policymaker and chairman of the 15th Finance Commission, NK Singh. The World Bank itself is in the middle of its evolution road map, which seeks to re-examine its objectives, operating modalities and finances. The Bank also has a new president, Ajay Banga, who has made reform a top agenda.

HT first reported that the first of a two-part report of the MDB expert group is complete and will be discussed at the Gandhinagar meet.