The establishment of a window or special purpose vehicle (SPV) within organizations like the World Bank to accommodate climate and transboundary funding of low- and middle-income countries is being discussed by the independent expert group on improving multilateral development banks (MDBs). The recent Modi-Biden discussions on the SPV are followed by this.
The group is looking at ways to make sure that the additional funding requirements of nations like India, Indonesia, and Brazil are met without affecting the flow of concessional financing to low-income countries in Africa and other regions that are battling to reduce poverty. The group will present its report to finance Minister Nirmala Sitharaman in the coming days.
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Official Statement for the SPV:
According to sources who spoke with TOI, the discussions are consistent with the decision made by the two leaders and reflected in the joint statement. According to the statement, “by the G20 Leaders’ Summit in New Delhi, the United States and India will work together to secure G20 commitment to create a major new dedicated pool of funds at the World Bank to deploy concessional lending for global challenges and to enhance support for crisis response in recipient countries of the International Development Association.”
The former US treasury secretary Larry Summers and the chairman of the 15th Finance Commission, N K Singh, co-chaired the expert group that was formed after the G20 finance ministers and governors of central banks met in Bengaluru earlier this year. “Risk aversion is the multilateral development banks’ preferred state. This is emphasised by the dominant ethos. Meaningful restructuring requires a culture change in attitudes, practises, and procedures, Singh said.
The panel met with Janet Yellen, the US Treasury secretary, last week as it sought to complete its report for the upcoming G20 FM summit in Gandhinagar this month. According to sources, there has been discussion of bringing multilateral development banks out of their comfort zones in order to capture private finance for this SPV. The main focus of the discussions was how additional finance can be made available to middle-income countries to address climate concerns at a time when rich nations are perceived to have not met their half of the commitment, while also ensuring that the risk-reward balance is maintained.
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