Union Finance Minister (FM) Nirmala Sitharaman on Thursday asked the World Bank to be realistic about the assessment of the potential for private capital mobilisation, given the global economic outlook.
In her address at the 108th Meeting of the Development Committee Plenary of the World Bank in Morocco’s Marrakech, the FM also called for increased delegation of authority, especially to country offices by the bank group, and aligning its processes and procedures as far as possible with those of other multilateral development banks (MDBs) to benefit client countries. “We believe the direction of the World Bank’s evolution will set the template across the MDB ecosystem,” she said.
On the sidelines, the FM also said Brazil taking over the G20 presidency in 2024 and India joining South Africa as the G20 troika was an excellent opportunity to provide positive momentum and elevation to the issues of the Global South like the G20 Finance Track had done under the Indian Presidency.
Sitharaman presented a list of suggestions for the evolution of the World Bank, including the active involvement of knowledge institutions of the Global South in the bank’s product and verticals. The FM pointed to the bank’s tendency to work mainly with knowledge and research institutions of the Global North.
On the issue of domestic resource mobilisation, the finance minister suggested adopting a holistic approach to raising fiscal resources, which is not limited to taxation.
“We also urge the bank to work closely with the International Monetary Fund (IMF) on debt sustainability, including supporting the implementation of the common framework for eligible countries and ad hoc debt restructuring processes for middle-income countries,” Sitharaman said.
While taking note of the proposals to increase private capital mobilisation, the finance minister said it would require an enhanced ‘One World Bank’ approach, with an emphasis on joint products. She said that given the private sector’s inherent commercial-returns focus, it was important that the countries were assisted in preparing a shelf of investable projects and a robust legal and risk-management framework to partner the private sector effectively and on an equal footing.
Stressing the need for substantive country engagements, Sitharaman said it was important to ensure that the World Bank Group’s country engagement model was firmly rooted in national development priorities.
“Also, while engaging in climate action in line with the principle of common but differentiated responsibilities and respective capabilities, we encourage the bank to be more ambitious in its commitment to adaptation finance,” the FM said.
She said there was a need to look beyond the Balance Sheet Optimisation measures and consider all options, including an International Bank for Reconstruction and Development capital increase, to avoid the situation of an unfunded but enhanced mandate for the bank.
While looking forward to the finalisation of the new World Bank Scorecard, Sitharaman said there was a need to acknowledge that there was an increasing feeling that the implementation of bank-financed projects had become slow, cumbersome, and expensive for client countries.
“This situation needs urgent addressing to ensure continued leadership and relevance of the World Bank Group in the development space,” Sitharaman said.
In her address, the finance minister said India supported the World Bank’s new vision to create a world free of poverty on a liveable planet, its new mission to end extreme poverty, and boost shared prosperity on a liveable planet. This gives the World Bank a formidable mandate to both fight poverty and address global challenges.
The minister met with Brazil’s economy minister Haddad Fernando on the sidelines of the fourth G20 Finance Ministers and Central Bank Governors meeting.
“The two ministers discussed issues of mutual interest, including strengthening MDBs, mobilising finance for climate change, crypto assets, Financing Cities of Tomorrow, advancing financial inclusion, managing global debt vulnerabilities, and BRICS expansion,” the finance ministry said in a tweet.
Sitharaman also met Jeremy Hunt, chancellor of the exchequer, United Kingdom, to discuss issues of mutual interest, including the Bilateral Investment Treaty.