- Calls upon G20 Finance Ministers to direct the multilateral development banks (MDBs) to scale investment that fulfills the Paris Climate Agreement and achieves the SDGs
- New report recommends reforms to revitalize MDBs to kick start global growth and drive an equitable, sustainable recovery from Covid-19 pandemic
NEW YORK | July 8, 2021 – The Rockefeller Foundation is calling upon G20 nations to direct the multilateral development banks (MDBs), in particular the World Bank, to scale and target investment that will expedite the end of the Covid-19 crisis while unlocking economic opportunity and stimulating a more equitable, sustainable global recovery from the pandemic. Reimagining the Role of Multilateral Development Banks urges the world’s leaders to come together around a more profound and implementable reform agenda that ends a cycle of inaction. The Foundation identifies a series of practical steps for MDB shareholders, including loosening the capital requirements of MDB borrowing and lending, and funding country-led energy transition packages in partnership with the private sector. Taken together, the roadmap’s actionable recommendations would help close the financing gap for pandemic response and ensure MDBs have the available capital required to scale investments aligned with the United Nation’s Sustainable Development Goals (SDGs) and Paris Climate Agreement.
“Nearly 80 years after the creation of the Bretton Woods institutions, the world must urgently reimagine the global financial architecture to finally recover from the Covid-19 pandemic’s devastation,” said Dr. Rajiv J. Shah, President of The Rockefeller Foundation. “Unfortunately, the World Bank and MDBs could today be playing a far more creative and significant role in assisting in the global recovery—so far in the face of the pandemic, we’ve seen too much risk aversion. G20 leaders must finally commit to reinvigorating these international financial institutions to restart the global economy with long-overdue investments in clean energy and human capital that can avert another crisis.”
Recommendations to Revitalize the MDBs:
The roadmap identifies several actionable recommendations and short-term priorities that would allow the MDBs to increase their lending powers without diminishing their financial standing or their credit ratings. Recommending that these be set in motion this year, the Foundation focuses on areas that can garner political support in the short term, including calling upon the G20 Finance Ministers to:
- Agree on a clear new mandate for the international financial institutions based around the Paris Climate Agreement and SDGs;
- Rapidly advance replenishments for MDBs and in particular, the International Development Association (IDA), part of the World Bank that helps the world’s poorest countries;
- Commission an independent capital adequacy review of MDBs in partnership with these institutions that better aligns investment policies with their strong financial track records;
- Advance a series of energy transition financing packages developed and led by key emerging economies, financed by MDBs and private actors, and advance one pilot package prior to COP 26, the UN’s Climate Conference.
The Rockefeller Foundation’s roadmap also reinforces past calls upon the G20 Finance Ministers to accelerate the issuance of $650 billion in Special Drawing Rights (SDRs) by the International Monetary Fund (IMF) when IMF shareholders convene in August. This includes the reallocation of at least $100 billion of these newly allocated SDRs towards Covid-19 vaccine procurement and delivery, and economic recovery in low- and middle-income countries, which have been hit the hardest by the pandemic. Doing so would end the pandemic in all countries by the end of 2022.
“We are calling upon the G20 leaders to act and direct the MDBs to close the massive financing gaps for pandemic response and economic recovery so that we avoid a Great Divergence between developed and developing world,” said Tom Hart, acting CEO of the ONE Campaign. “The world is experiencing a dramatically uneven recovery from the biggest crisis in generations which is continuing to rage across the Global South. We need a globally coordinated plan to fund vaccines, help vulnerable countries withstand the economic shock caused by Covid-19, and forestall an even greater future crisis due to climate change.”
Flat Funding from the MDBs during the Covid Crisis:
Many developing countries have inadequate social safety nets and limited fiscal space to respond to the economic crisis brought on by Covid-19, much less position themselves for future investment and growth.
For example, data from the IMF reveals that sub-Saharan Africa’s pandemic-related fiscal support has amounted to 3% of GDP, compared to about 24% of GDP for developed countries. At the same time, there was no notable increase in lending across the MDB system in 2020 in the face of the biggest downturn in decades.
“If G20 countries directed the MDBs to play a more catalytic role in scaling up investment in infrastructure and human capital, particularly in low-income countries, it would create the global demand needed to stimulate investment and employment,” said Maria Kozloski, Senior Vice President of Innovative Finance at The Rockefeller Foundation. “These global financial institutions could reclaim their historic place by decisively shaping the speed and character of the global recovery, and returning to the center of the global economic order and development impact.”
Solutions to End the Pandemic and Drive a Global Recovery for All
This latest roadmap represents the third iteration of a series published by The Rockefeller Foundation this year. The purpose of the series is to identify and prioritize practical steps that G20 leaders can take in coming months to end the pandemic and set in motion an equitable, sustainable global recovery. In April, An Action Plan for Financing Global Vaccination and Sustainable Growth focused on the role of the IMF to finance Covid-19 vaccines, and in early June, One for All: An Updated Action Plan for Global Covid-19 Vaccination drilled down on financing solutions for strengthening the global pandemic response.
About The Rockefeller Foundation
The Rockefeller Foundation is a pioneering philanthropy built on collaborative partnerships at the frontiers of science, technology, and innovation to enable individuals, families, and communities to flourish. We work to promote the well-being of humanity and make opportunity universal. Our focus is on scaling renewable energy for all, stimulating economic mobility, and ensuring equitable access to healthy and nutritious food. For more information, sign up for our newsletter at rockefellerfoundation.org and follow us on Twitter @RockefellerFdn.
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