Developed nations will need to invest $100-150 billion per year through multilateral development banks to support emerging economies in financing their climate transition, according to Mark Carney, UN special envoy for climate action and finance. Carney emphasized the importance of transition finance for challenging sectors and called for changes in the operational orientation of MDBs to prioritize climate funding.
World Bank president Ajay Banga has stated that the bank's vision is being redefined to focus on eradicating poverty on a livable planet and includes elements such as climate, fragility, and pandemics, while also emphasizing the collaboration with multilateral development banks and the inclusion of the private sector in renewable energy investments.
The G20 leaders have made a commitment to accelerate reforms of multilateral development banks (MDBs) in order to address global challenges and maximize developmental impact, with a focus on the needs of low- and middle-income countries. India, as the outgoing G20 President, has emphasized the need for MDBs to be more sensitive to the changing developmental needs of the 21st century, particularly in relation to climate change. A panel of experts has been set up to craft these reforms, which include tripling sustainable lending levels by 2030 and creating new funding mechanisms. The G20 has also called for ambitious implementation of a roadmap on the capital adequacy framework of MDBs, which could unlock $200 billion worth of extra funding potential.
There is a lack of political will in expanding and increasing the capital of multilateral development banks due to financial deficits and nationalist sentiments in member countries, according to Lawrence H Summers, former US Secretary of the Treasury.
Former US treasury secretary Larry Summers has stated that India needs to achieve 8% economic growth in order to bring about significant improvements in the lives of its citizens, and has called for increased capital and authority for multilateral development banks to address challenges such as climate change and pandemics.
The independent expert group on multilateral development bank (MDB) reforms is encouraged by the response to their recommendations, but believes that there is still a long way to go for effective implementation; they also discuss the shift in developed countries' stance, addressing issues around private funding and MDB reform, the threat of inflation, the slowing Chinese economy, and the potential for India to absorb manufacturing from China.
The U.S. Treasury Department is urging the World Bank and other multilateral development banks to leverage shareholder capital commitments to increase lending capacity for developing countries by April 2024 in order to address global challenges like climate change and poverty.
