Why in news:-
– G20 export group constitute of Harvard university president and chairperson of fifteenth finance commission of India on reforming of multilateral development bank (MDB).
– G-20’ agenda includes evaluation of the scale of funding ramp up needs for IMF and WB to be able to finance member countries need with possible mechanism to raise from the private sector and
more effectively among different institution.
– The financing is not problem of MDBs but member countries are not interested in step-up capital reported by G-20 expert panel.
– G-20 expert group’s mandate is to suggest a road map for rebooting the ecosystem of MDBs.so that they are better equipped to finance sustainable goals and emerging global challenge like
climate changes and health.
What is MDB
1. International financing institution chartered by two or more countries for purpose of encouraging economic development in poorer nation such as IMF, WB, AIIB etc.
2. Unlike commercial bank, MDBs don’t seek maximise profit for their shareholder but the priorities is developmental goal as eradicate poverty, funding in infrastructure development etc.
Role of MDBs in development
– Provided long term soft loan for capital intensive infrastructure
– Provided loan assistance during crisis of Balance of Payments.
– Humanitarian assistance during war
– Fulfil heavy investment needs for climate financing and development
– Scaling up to help countries maximise impact of their own resources and build capacity- MDBs are working for their shareholder countries at national and sub-national levels to increase
available domestic fund for sustainable development, including raising tax revenue, improving the quality of expenditure and managing risk.
– Invest in countries to develop environmental policy to attract and manage greater financing flows- developing countries to achieve the SDGs through investment.
Associate concern with MDBs
1. Structure- shareholding structure, change the risk assessment by credit rating agencies.
2. Western dominance by European and USA.
3. Countries are prone to debt trap situation.
4. Scaling up work with private sector, intermediatories and investor.
5. Scale up financing for demand driven climate action- clean sustainable energy solution,sustainable transport, urban development, climate smart agriculture and forestry.
6. Work together with implementing agency such global environmental, global climate investment fund, green climate fund.
7. Doesn’t have much fund to fulfil the world’s need.
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