Multilateral development banks (MDBs) need to provide an additional USD 260 billion annually to fund sustainable infrastructure and help nations achieve SDG targets, a G20 expert group report said.
Major MDBs are World Bank, International Finance Corporation (IFC), Asian Development Bank, Asian Infrastructure Investment Bank (AIIB), Inter-American Development Bank (IDB) and African Development Bank (AfDB)
Multilateral development banks (MDBs) need to provide an additional USD 260 billion annually to fund sustainable infrastructure and help nations achieve SDG targets, a G20 expert group report said.
According to the report titled 'Strengthening MDBs: The Triple Agenda', additional spending of some USD 3 trillion per year is needed by 2030, of which USD 1.8 trillion represents additional investments in climate action, mostly in sustainable infrastructure, and USD 1.2 trillion in additional spending to attain other sustainable development goals (SDGs).
"MDBs should provide an incremental USD 260 billion of the additional annual official financing, of which USD 200 billion in non-concessional lending, and help mobilise and catalyse most of the associated private finance," the report said.
The major MDBs are World Bank, International Finance Corporation (IFC), Asian Development Bank, Asian Infrastructure Investment Bank (AIIB), Inter-American Development Bank (IDB) and African Development Bank (AfDB).
The report further said that the international development finance system should be designed to support this spending by providing USD 500 billion in additional annual official external financing by 2030, of which one-third in concessional funds and non-debt-creating financing and two-thirds in the form of non-concessional official lending.
It should also help mobilise and catalyse an equivalent amount of private capital, implying a total additional external financing package of USD 1 trillion, it added.
The G20 finance ministers had constituted an 11-member expert group to suggest measures to strengthen MDBs. Noted economist Lawrence Summers and 15th Finance Commission Chairman N K Singh are co-convenors of the group.
The group has submitted the first part of the report to G20 finance ministers and the second part would be submitted in October during the annual meetings of the IMF and World Bank.
"The world’s stock of infrastructure will double in the next decade, much of it in developing countries, so the choices made now will determine prospects for growth, sustainability and inclusion for decades to come," the report said.
The report also suggests that the process of general capital increase (GCI) should be initiated for MDBs which are facing lending constraints.
"It would simultaneously signal to developing country officials that they can trust that pledges of enhanced international support for their efforts will actually be realized," it added.
A GCI would give MDBs the strong financial foundation they need to implement these other reforms and achieve the necessary scale-up of additional annual lending by USD 200 billion a year, it added.