India’s Prime Minister Calls for Expansion of Multilateral Lenders
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India’s prime minister Narendra Modi has called for the mandate of multilateral lenders such as the World Bank to be expanded, as the IMF’s managing director demanded an increase in the lender’s resources by the end of the year.
Efforts to Boost Multilateral Lenders
- Efforts to boost the balance sheets and reform the governance of the Washington-based multilateral lenders have been a central issue at the Group of 20 summit in New Delhi this weekend.
- These efforts are partly as a means for western states to curry favor with developing nations amid geopolitical divisions over Russia’s war against Ukraine.
Modi’s Call for Expansion
“We need to expand the mandate of multilateral development banks,” Modi said during the third leaders’ session of the New Delhi leaders’ summit, which began on Saturday. “Our decisions in this direction should be immediate and effective.”
India’s Financial Agenda
Despite geopolitical tensions and discord over Ukraine, Indian officials say they have advanced an ambitious financial agenda during New Delhi’s rotating presidency of the group of large economies, including reform of multilateral banks, regulation of cryptocurrencies, and the framework for restructuring heavily indebted countries’ debt.
India’s Influence in G20
India, which styles itself as a leader of the so-called “Global South” group of developing economies, on Saturday successfully pushed the G20 to admit the African Union as a full member of the grouping.
Reforms for Fossil Fuels and Green Technologies
Modi’s call for an expanded mandate for multilateral banks echoes demands made by the US and EU for reforms of the World Bank, which are seen as crucial in helping poorer nations meet the financial demands required to pivot away from fossil fuels and adopt green technologies.
Concerns Over China’s Bilateral Lending
Washington is also concerned that a rise in bilateral lending by China will lead to stronger diplomatic ties between the Global South and Beijing.
US and EU’s Proposals
- Ahead of the summit, US president Joe Biden pitched for a $25bn increase in the World Bank’s lending capacity for middle-income and low-income countries.
- The EU has prioritized wide-ranging reform of the lender to give developing countries more sway over their decisions and operations.
Joint Statement by G20 Leaders
On Saturday, the leaders of the world’s 20 biggest economies agreed a joint statement that “call[s] on the [multilateral development banks] to undertake comprehensive efforts to evolve their vision, incentive structures, operational approaches, and financial capacities so that they are better equipped to maximize their impact.
“We will collectively mobilize more headroom and concessional finance to boost the World Bank’s capacity to support low and middle-income countries that need help in addressing global challenges,” the statement added. It provided no details on the possible scale of the increases or timeframe.
IMF’s Lending Quota
Separately, IMF head Kristalina Georgieva said the fund‘s lending quota needed to be increased. Leaders agreed that a review into its quota would be included by December 15 this year.
“To make the global economy stronger and more resilient in a more shock-prone world, it is vital to reach an agreement to increase the IMF’s quota resources before the end of the year and secure the needed resources for the fund’s interest-free support to the poorest countries,” Georgieva said in a statement at the summit.