NEW DELHI: A concoction of capital from private sector and multilateral financial institutions is needed to bring developing economies back on the pre-pandemic growth track.
G20 members have agreed that the multilateral institutions not only need reforms but also require new mechanism to conduct affairs.
At a side event, during the first G20 Finance & Central Bank Deputies meeting, delegates from G20 member and invitee countries deliberated on ways to build additional finance capacity to come out of Covid-19 induced economic slump and the challenges posed by Russia-Ukraine crisis.
The theme of the event was, ‘Strengthening MDBs (Multilateral Development Banks) to address Shared Global Challenges of the 21st century.
“More capital may be needed, not only that, it is not just about MDBs putting in the money. Their (MDBs) actions, how they can de-risk a project so that private money can come in or the blended finance can come in,” said Ajay Seth, Secretary, Department of Economic Affairs, India.
Seth added, “Blended finance can be an effective tool for several economies.” He was addressing a press conference after the completion of the G20 Finance Track meeting on December 14, in Bengaluru.
The existing financial models are falling short of leading the world out of an economic downturn. Developing world in particular has been hit hard by the pandemic and global inflation caused by Russia-Ukraine crisis. Seth said, G20 Finance Track meeting delegates agreed that, “existing resources and way of doing things is not sufficient” to even bringing back world on growth track.
During the meeting, there emerged consensus among the delegates that new models are needed to come up with resources for laying down foundation of digital public infrastructure at global scale. Putting together finances for climate action would be another uphill task. “The business model or the operation model also needs to change. These were design for previous decade that served us well, now things are changing, more technologies, more demands are coming. The operational and business model should also reflect these changing demands,” Seth said.