Poverty, Hunger And War - Bold Financial Initiatives To Tackle Global Crises
As the global “multicrisis” continues apace – deepening poverty, hunger and misery – efforts to increase global development finance in response have, sadly As the global “multicrisis” continues, efforts to increase global development finance in response have been too slow to act. A proposed “development roadmap” was published in January, which outlines the Bank’s twin mission of eradicating extreme poverty and increasing shared prosperity, supporting a smarter energy transition in middle-income countries, addressing growing inequalities between countries, and addressing the cross-border dimensions of challenges such as climate change. The roadmap argues for capital increases from shareholders to support more non-concessional lending, increased concession financing capacity, and exploration of new concession and hybrid financing options to encourage investment in global public goods. Reviews of Roadmap have been mixed, with some highlighting an overall lack of ambition in the document. Australia, working with other stakeholders, should continue to press for a more ambitious and comprehensive reform package.
Published : 7 days ago by TheTimes Nigeria in
As the global “multicrisis” continues apace – deepening poverty, hunger and misery – efforts to increase global development finance in response have, sadly but surprisingly, been too slow to act. .
One of the more ambitious blueprints, put forward by Barbados Prime Minister Mia Mottley in mid-2022 – dubbed the “Bridgetown Initiative” – includes changes to: Restructuring of sovereign debt structure to prevent fiscal crisis; greater redistribution of financial reserves of rich countries and mobilization of private finance to reduce vulnerability to shocks such as climate change; and reform of the International Monetary Fund (IMF) and the World Bank, the two major institutions associated with the post-war “Bretton Woods” system. Several G7 countries, including the US, Germany and France, have widely supported the proposals.
And they are expected to be the focus of a development finance summit in Paris in June co-hosted by Motley Fool and French President Emmanuel Macron. This blog focuses on World Bank Reforms.
In 2022, the G20 launched an independent review of the Capital Adequacy Framework (CAF) of Multilateral Development Banks (MDBs). The “CAF Review” recommended that MDBs, of which the World Bank is the largest, revise their risk structures and take better advantage of their callable capital – pledged to support scale-up in lending. But the payment was not made by the shareholder governments.
In response to this review and a request from 10 shareholders, including Australia, the bank’s management published a proposed “development roadmap” in January.
The document had been leaked to the press weeks earlier. The roadmap outlines the Bank’s twin mission of eradicating extreme poverty and increasing shared prosperity, supporting a smarter energy transition in middle-income countries, addressing growing inequalities between countries, and addressing the cross-border dimensions of challenges such as climate change. How can it be expanded to combat State fragility and pestilence.
In terms of operations, the document considers how to improve the Bank’s current country-based programming and performance model, its concession and allocation criteria, and its private sector instruments to support greater investment in global public goods. May go.
On financing, the roadmap argues for capital increases from shareholders to support more non-concessional lending, increased concession financing capacity, and exploration of new concession and hybrid financing options to encourage investment in global public goods .
It notes, but does not elaborate, ongoing technical work for shareholders with respect to risk transfer, redeemable capital and other financial issues. For next steps, the roadmap envisages that a process of consultation with shareholders, customers and stakeholders on the final reform package would begin over the next nine months, culminating in the bank’s annual meetings in October. Reviews of Roadmap have been mixed.
Some experts detailed an overall lack of ambition in the document (despite the Bank’s demand for more resources) as well as a detailed analysis of the trade-offs involved in increasing investment in global public goods against country-based poverty reduction efforts. Absence highlighted.
Given the scale of the fiscal gap, reform proponents have also argued for a quick and clear path on the recommendations of the CAF review. Speaking on behalf of the bank’s largest shareholder, US Treasury Secretary Janet Yellen has said: “We would like to see some progress on an early timeline.
And [we] I think there are things that can be done to expand lending given the current capital release.” However, some developing country members are reportedly concerned that these changes could lower the bank’s AAA credit rating. and thus may increase its borrowing and lending costs.
Climate experts and advocates have questioned the adequacy of the Bank’s 35 percent target by 2025 for climate investment, given that other MDBs such as the European Bank for Reconstruction and Development and the Asian Infrastructure Investment Bank have 50 percent targets.
He also highlighted the need for the bank to be more transparent about how it calculates climate investments, and to ensure that its project financing is in line with the Paris Climate Agreement.
Australia seems to be pushing for major reforms. On better access to the bank’s capital, Treasurer Jim Chalmers has called for “a swift and ambitious response” to the CAF review, noting that “sustainable growth prospects for many developing countries appear to be in grave jeopardy”. .
If the Australian government wants the World Bank to do more to respond to the multiple crises, it will need more than encouraging the bank to leverage its existing capital and hope the private sector fills the gap.
Australia, working with other stakeholders, should continue to argue for a more ambitious and comprehensive reform package including climate change than the current roadmap. In return, and commensurate with Australia’s size and its interests, the government should increase both its capital and concessional contributions to the World Bank.
• Cameron Hill is Senior Research Officer at the Center for Development Policy. He has previously worked with DFAT, Parliamentary Library and ACFID. The views are of the author only. This research was done in collaboration with the Bill & Melinda Gates Foundation. This article was first published on the DevPolicy Blog (devpolicy.org) from the Development Policy Center of the Australian National University.