India is likely to suggest setting up a G20 expert committee to examine World Bank reforms and improve the institution’s lending capacity for climate funding in middle- and low-income nations. The plan is anticipated to be brought up at a G20 summit this week at the Nandi Hills summer retreat, which is close to Bengaluru, India’s tech powerhouse. This is the first significant gathering of financial leaders from the bloc under India’s G20 chair.
The news comes after World Bank President David Malpass and Indian Finance Minister Nirmala Sitharaman spoke on Wednesday about reducing debt vulnerabilities. One of the sources, who asked to remain anonymous because they were not authorized to speak to the media, stated, “India is formulating a proposal to form a committee for reforms to the World Bank.” The World Bank, the Finance and Foreign Ministries of India, and Reuters’ request for comment were not immediately returned. India and other nations have long supported democratization of the World Bank. Varying financing conditions for least developed and emerging nations are preferred, according to a second source.
The G20 financial chiefs conference will focus heavily on reforming multilateral development banks, according to India’s main economic adviser on Tuesday. Multilateral development banks “can play a big role in incentivizing private capital, de-risking instruments, and providing larger concessional funding,” Sitharaman told Malpass, noting that climate finance was a focus area during India’s G20 presidency.
The U.S. Treasury Secretary Janet Yellen is also anticipated to push for agreement on revamping multilateral development banks so that they may significantly increase their funding to address urgent global concerns like violence and climate change. The aim for the World Bank Group’s 2021–2025 climate change action plan is to allocate an average of 35% of the institution’s funding to climate action. The Group reported in September that it provided a record $31.7 billion in finance in fiscal year 2022 to assist nations in addressing climate change, a 19% rise from the all-time high of $26.6 billion in the prior fiscal year. The World Bank has suggested reducing the major bank’s loan-to-equity ratio from 20% to 19%, freeing up around $4 billion annually for lending. Reps from the Barbados and German governments told Climate Home that while this was a promising beginning, it did not go far enough. After criticism for his skepticism about climate change, Malpass said last week that he would step down by June.