Devex @ UNGA 79: MDBs want to cooperate more closely. What progress have they made?

Summary

In this insightful interview, Elon Goldman, President of the Inter-American Development Bank (IDB), discusses the vital role of Multilateral Development Banks (MDBs) in achieving global development goals. Key topics include MDB-UN collaboration, climate finance progress, and the creation of country-specific development platforms. Goldman highlights MDBs’ role in mobilizing private sector investment, enhancing domestic resource mobilization through tax reforms, and reshaping financial strategies to address global challenges. Emphasizing innovation, he touches on the rechanneling of Special Drawing Rights (SDRs) and the critical importance of MDB reforms in driving sustainable development.

Takeaways

• 😀 MDBs and UN are committed to working together to achieve SDGs by aligning their priorities and resources effectively.
• 😀 The MDBs have seen an increase in their lending capacity, with a projected $400 billion over the next decade to support global development.
• 😀 Private sector participation in climate finance has risen significantly, with an increase in co-financed projects and financial instruments like currency hedging.
• 😀 MDBs are focusing on creating country platforms to address specific national development challenges, with pilots running in countries like Egypt and Colombia.
• 😀 MDBs play a crucial role in advising countries on tax reform and enhancing domestic resource mobilization to improve fiscal policies.
• 😀 Rechanneling Special Drawing Rights (SDRs) is a key initiative to fund global development projects, though there is some resistance from central banks in implementation.
• 😀 The Financing for Development Summit will be crucial for aligning MDB and UN efforts, especially in areas like climate finance, the private sector's role, and meeting the SDGs.
• 😀 There is a growing emphasis on the need for MDBs to maintain ownership over their reforms, rather than simply following external mandates.
• 😀 Private sector investments are being actively integrated into development finance through innovative risk management tools and co-investment strategies.
• 😀 MDBs aim to help countries build stable tax systems and promote fiscal responsibility, which includes both tax policy and spending efficiency.
• 😀 MDBs are engaging with countries to ensure that the platforms they develop are practical, country-owned, and scalable across different contexts.

Q & A

What was the main focus of the cooperation between MDBs and the UN as discussed in the transcript?

The main focus was aligning efforts to ensure more ambitious goals, avoid duplication, and work together on achieving the SDGs. The cooperation aims to increase financing capacity and tackle critical issues like climate change.

What significant progress did MDBs make since April, according to the discussion?

MDBs made significant progress by increasing their lending capacity by $400 billion over the next decade. They also saw a 25% increase in climate finance and doubled efforts to mobilize private sector financing.

How are MDBs and the UN addressing development challenges in fragile countries?

In fragile countries like Haiti, MDBs and the UN are working on country-level platforms that aim to provide more tailored and impactful support. These platforms are seen as key to long-term development in these regions.

What role do MDBs play in engaging the private sector, especially regarding climate finance?

MDBs play a critical role in engaging the private sector by managing risk through co-financing, guarantees, and hedging mechanisms. These tools help de-risk investments, encouraging private sector participation in climate-related projects.

What challenges are associated with the proposed use of Special Drawing Rights (SDRs)?

The challenge lies in obtaining political backing from key G20 countries to rechannel SDRs for poverty and hunger alleviation. The proposal is still in progress and requires cooperation from central banks to ensure its success.

Why is it important for countries to 'own' their development platforms and reforms?

It is important because ownership ensures that development strategies are locally driven, tailored to the specific needs of the country, and more likely to lead to successful and sustainable outcomes.

What is the role of MDBs in domestic resource mobilization and tax reform?

MDBs help countries build better tax systems and increase their tax collection efficiency. They also assist in framing policies, including tax reforms, to improve the fiscal environment and mobilize domestic resources.

How do MDBs contribute to the efficiency of government spending?

MDBs engage with governments to improve fiscal consolidation and ensure that spending is efficient. They work on both revenue generation (tax reforms) and expenditure control to enhance the overall fiscal policy.

What is the significance of the upcoming Financing for Development summit?

The summit aims to set a clear agenda for the next steps in achieving the SDGs, including aligning the efforts of MDBs, governments, and the private sector. It will focus on practical, actionable items such as country platforms and domestic resource mobilization.

How are MDBs addressing the need for private sector financing in fragile and developing countries?

MDBs are using financial instruments like co-financing and guarantees to encourage private sector involvement. By managing risk, they help unlock private capital for development projects, especially in fragile and developing countries.