World leaders gathered at the Paris summit said on Friday that multilateral development banks are expected to increase lending by $200 billion by managing their balance sheets more tightly and taking on more risk.
Many of the 40 leaders gathered in Paris expressed concern that the Bank and the International Monetary Fund were obsolete in the face of challenges such as climate change and debt burdens in poor countries in the wake of the COVID-19 pandemic.
“We expect an overall increase in the lending capacity of the multilateral development banks by $200 billion over the next 10 years by improving their balance sheets and taking on additional risks,” the summit said in a statement obtained by Reuters.
“If these reforms are implemented, multilateral development banks may need additional capital,” the statement said.
The United States is the largest contributor to the International Monetary Fund and the World Bank.
Hosted by French President Emmanuel Macron, the Paris summit brings together some twenty leaders from Africa and Asia, the Chinese prime minister and the Brazilian president to jump-start a new global financial agenda.
At the summit, rich countries completed a deferred commitment of $100 billion in climate finance to developing countries and set up a fund to protect biodiversity and forests.
The goal of the summit is to develop a multifaceted roadmap that can be used over the next 18-24 months, covering topics from debt relief to climate finance. Many of the topics on the agenda include proposals from a group of developing countries led by Mia Motley, Prime Minister of Barbados, which have come to be known as the “Bridgetown Initiative”.
“There is a political consensus that this issue is more important than all of us, and we must work together, and the multilateral development banks will have to change the way they work, and this is acceptable,” Motley said at the closing meeting of the Council. summit.
“We are leaving Paris not just with speeches, but with a commitment to go into the smallest details to make sure that what we agreed on here can be implemented,” she added.
The leaders also hoped to reform post-war financial institutions and free up funds to fight climate change by reaching a consensus on how to advance a range of initiatives anchored in the G-20, the United Nations Climate Change Conference (COP), the International Monetary Fund, the World Bank and the United Nations, for example.
The $100 billion pledge falls far short of the actual needs of poor countries, but it has come to symbolize the failure of rich countries to make financial commitments to fight climate change. This has fueled distrust of broader climate talks between countries trying to push forward measures to cut carbon emissions.
“If we fail to set the rules now, as others have done before, we will be held responsible for what could be the worst reality for humanity,” Motley said.
