G20 members agree to work on multilateral banks’ reform | India News – Times of India

BENGALURU: G20 members have agreed to support India’s proposal on developing a roadmap for reform of multilateral development banks (MDBs), such as the World Bank, with finance minister Nirmala Sitharaman also claiming “success” in moving towards a common position on debt restructuring of poor and developing countries, with Sri Lanka among four identified for faster resolution.
Sitharaman said a panel chaired by former US treasury secretary Larry Summers, with 15th Finance Commission member NK Singh as co-chair, and two other members will present the plan by the next meeting of G20 finance ministers and central bank governors in July.
The idea is to reform MDBs and “make them far more nimble-footed” to meet 21st century challenges and meet the development needs of the countries, she said. Reform of the World Bank, including meeting needs of climate finance, have been on the agenda for a while, along with a change in the vote share of countries in IMF to reflect the change in their economic might. These entities were set up in the post-World War era and India and China have been seeking a revamp.
While a final word on loan restructuring of debt-stressed countries has not been said, Sitharaman said arriving at a common language, for which discussions stretched till Saturday, was a success.
One of the successes was to have arrived at a common position on the debt language, stretched till this morning, she said. “Strengthening multilateral coordination by official bilateral and private creditors is needed to address the deteriorating debt situation and facilitate coordinated debt treatment for debt-distressed countries,” the outcome document released after the meeting said.
The FM said the idea is to speed up resolutions as countries such as Zambia have been waiting for over one-and-a-half years for the process to be completed, which adds to the pressure. She said Ghana, Sri Lanka, Zambia, Ethiopia have been identified for quicker resolution.
The issue has deeply split China, the world’s largest bilateral lender, and multilateral agencies and other nations. Beijing has insisted that international lenders also take haircut, something which is not allowed for multilateral banks.
“Across the table there was unanimity about the urgency to address vulnerabilities of low- and middle-income countries… There has to be transparency in debt treatment. One part which was holding it up was whether MDBs should be part of debt restructuring, China has a different view. But all other countries feel MDBs get a preferred creditor status to retain their AAA (credit rating) status,” economic affairs secretary said.