India’s Prime Minister, Narendra Modi, has called for an expansion of the mandate of multilateral lenders such as the World Bank, while the Managing Director of the IMF has demanded an increase in the lender’s resources by the end of the year. Reforms of multilateral lenders have been a key focus at the G20 summit in New Delhi, with the aim of gaining favor with developing nations amid geopolitical tensions over the Ukraine conflict. Modi emphasized the need for immediate and effective decisions in expanding the mandate of these development banks. India, as a leader of the developing economies, has pushed for ambitious financial agenda items during its presidency of the G20, including multilateral bank reform and regulation of cryptocurrencies.
Modi’s call aligns with demands from the US and EU for World Bank reforms, which are deemed essential for helping poorer nations transition away from fossil fuels and adopt green technologies. Additionally, concerns have been raised about the potential for stronger diplomatic ties between developing nations and China due to increased bilateral lending. Prior to the summit, US President Joe Biden proposed a $25 billion increase in the World Bank’s lending capacity for middle-income and low-income countries, potentially rising to over $100 billion with additional pledges. The EU has also prioritized reform to give developing countries greater influence over decisions and operations, but the US may resist this if it grants China a greater voting share.
The G20 leaders issued a statement calling on multilateral development banks to evolve their vision, incentive structures, operational approaches, and financial capacities to maximize their impact. They also pledged to mobilize more headroom and concessional finance to enhance the World Bank’s capacity to assist low and middle-income countries facing global challenges, although specific details were not provided. Separately, IMF head Kristalina Georgieva stated that the fund’s lending quota needed to be increased, with a review to be conducted by December 15. Georgieva emphasized the importance of securing the necessary resources for the fund’s interest-free support to the poorest countries in order to strengthen the global economy in a more shock-prone world.