G20 Delhi Declaration: What are MDBs and why is it a big deal?

As the G20 Delhi declaration was unveiled on Saturday, leaders pledged to “pursue reforms for better, bigger and more effective MDBs” and acknowledged the need for an international development finance system “that is fit for the purpose”; i.e., one capable of helping developing countries, “in particular the poorest and most vulnerable”, surmount economic challenges, including those posed by climate change.

“The international finance system must deliver significantly more financing to help developing nations and EMEs (emerging market economies) fight poverty, tackle global challenges and maximise development impact,” the G20 said, noting that stronger MDBs “will be important” to these efforts.

MDBs also found mention in a discussion on mobilising finance to “support the commercialisation of early-stage technologies that avoid, abate and remove greenhouse gas emissions and facilitate adaptation” in order to “support developing countries’ implementation of the Paris Agreement”.

MDBs or Multilateral Developments Banks are banks like World Bank or Asian Development Bank which provides “financial and technical support to developing countries to help them strengthen economic management and reduce poverty”. They are essential for climate action and to achieve sustainable development goals. They also work on issue like combating climate change and ensuring equitable and sustainable global development to boost the world bank’s capacity to support low and middle income countries.

Following the declaration’s release, the White House said he had worked to “fundamentally reshape and scale up the World Bank to more effectively deliver poverty reduction and inclusive economic growth”, and had asked Congress to unlock new concessional financing of over $25 billion from US action alone.

At a pre-summit briefing on Friday, Amitabh Kant, India’s G20 sherpa said, “We wanted the world to take the lead on green development in the context of the climate crisis… and because both SDGs and climate action require finance, particularly for developing and emerging markets in the Global South.”

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