Receive free updates on the global economy
I will send myFT Daily Digest E-mail summarizing the latest information world economy News every morning.
Indian Prime Minister Narendra Modi has called for greater powers for multilateral lenders such as the World Bank, after the IMF managing director called for more lenders’ financial resources by the end of the year.
Efforts to strengthen the balance sheets and reform the governance of the Washington-based multilateral financial institutions were reported this weekend as one way the West wins the favor of developing countries amid geopolitical divisions. It is a central topic of discussion at the G20 Summit, which will be held in Delhi. Regarding Russia’s war with Ukraine.
“There is a need to expand the mandate of multilateral development banks,” Modi said at the third New Delhi summit that began on Saturday. “Our decisions in this direction must be immediate and effective.”
Despite geopolitical tensions and discord over Ukraine, Indian officials have pushed for multilateral banking reforms, cryptocurrency regulation, He said that the country has pursued ambitious monetary policies, including a framework for debt restructuring for heavily indebted countries.
India, which claims to be the leader of the so-called “Global South” group of developing countries, on Saturday successfully lobbied the G20 to recognize the African Union as a full member of the group.
Prime Minister Modi’s call for greater powers to multilateral banks will support US support for World Bank reform, which is seen as critical in helping poor countries meet the financial demands needed to shift away from fossil fuels and adopt green technologies. Reflects EU requirements.
The US government is also concerned that increased bilateral financing by China will lead to stronger diplomatic ties between the Global South and the Chinese government.
Ahead of the summit, U.S. President Joe Biden proposed increasing the World Bank’s lending capacity to middle and low-income countries by $25 billion, but more than $100 billion if other countries make additional commitments. There is a possibility that it will expand to.
Separately, the EU is prioritizing broad reforms of financial institutions to give them greater influence over decision-making and operations in developing countries. The US is likely to resist giving China more voting rights.
On Saturday, the leaders of the world’s 20 largest economies said:[s] in [multilateral development banks] Implement comprehensive efforts to evolve our vision, incentive structure, operational approach and financial capabilities, and strengthen our readiness to maximize their impact.
“We will mobilize more spare and concessional resources to increase the World Bank’s ability to assist low- and middle-income countries who need help in meeting global challenges,” the statement said. added. He did not provide details on the size or duration of the possible increase.
Separately, IMF chief Kristalina Georgieva said the fund’s lending facilities needed to be expanded. Leaders agreed that a review of the allocation would be included by December 15 this year.
“In order to make the global economy stronger and more resilient in a world more prone to shocks, we must reach an agreement by the end of the year to increase the IMF’s resource allocation and secure the resources necessary for the IMF’s interest-free support. It is important that the poorest countries are the poorest countries,” Georgieva said in a statement at the summit.