CAMBRIDGE – The world is literally on fire this summer. Experts estimate that another COVID-level public health threat is likely to emerge in the next generation. Rising interest rates have left dozens of countries with unmanageable debt burdens. And for the first time in nearly half a century, the global economy is fracturing rather than coming together.
These realities shaped the recommendations that we have just made to the G20 through a special expert group on development financing (which we co-chair). Our central conclusion is that this uniquely challenging moment requires a dramatic transformation of the operations of the multilateral development banks (MDBs), starting with the World Bank. Even as developing countries face much larger financing needs to meet development and climate goals, MDBs’ disbursements have not kept pace, and the degree to which they now transfer resources to developing countries is unacceptably low.
While most institutions, most of the time, aim for a gradual strengthening of their scale and effectiveness, MDBs have been stuck in place. We must move past sterile debates about whether we need more money or better policy, more green initiatives or more development spending, more public-sector programs or more private lending, more leverage or more capital. The language of “both/and” must replace that of “either/or.” To that end, we are calling for action on three fronts.
First, the MDBs should embrace a triple mandate by adding global public goods (GPGs) to their current goals of eliminating extreme poverty and boosting shared prosperity. That will mean fleshing out the policies and procedures needed to integrate their climate and development agendas. By clarifying and formally committing to these objectives, MDBs can better design and execute programs to address GPGs (such as climate mitigation and adaptation, biodiversity, water security, and pandemic preparedness) rapidly and at scale.
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