Global leaders convened at the Paris Summit on Friday and announced that multilateral development banks are expected to increase their lending capacity by $200 billion. This will be achieved by effectively managing their public budgets and assuming higher levels of risk. The leaders, numbering around 40, expressed concerns that the working models of institutions such as the World Bank and the International Monetary Fund (IMF) have become outdated and insufficient to address challenges like climate change and debt burdens in impoverished countries following the COVID-19 pandemic.
According to a statement obtained by Reuters, the summit declared, “We anticipate a total increase of $200 billion in the lending capacity of multilateral development banks over the next ten years through the improvement of their public budgets and assuming more risk.” The statement also highlighted that if these reforms are implemented, multilateral development banks may require additional capital.
It is worth noting that the United States is the largest contributor to the IMF and the World Bank.
The Paris Summit, hosted by French President Emmanuel Macron, brought together approximately twenty African leaders, the Chinese Premier, and the Brazilian President to provide momentum for a new global financial agenda.
During the summit, the wealthy nations finalized a delayed climate financing commitment of $100 billion for developing countries and established a fund for biodiversity and forest protection.
The objective of the summit is to develop a multi-faceted roadmap that can be utilized within the next 18 to 24 months, addressing topics ranging from debt relief to climate financing.
Numerous agenda items proposed by a group of developing countries, led by Mia Mottley, the Prime Minister of Barbados, are being reviewed. This group, known as the “Bridge Town Initiative,” aims to foster collaboration among nations.
During the concluding session of the summit, Prime Minister Mottley stated, “There is political consensus that this issue is greater than any one of us, and we must work together. Multilateral development banks will need to change their way of operating, and this is accepted.”
She further emphasized, “We do not leave Paris simply with speeches, but with a commitment to delve into the nitty-gritty details to ensure the feasibility of our agreements.”