9 Feb 2023
Keynote speaker: Secretary of Finance Janet Yellen
Secretary of Finance Janet Yellen, we need the MDBs (Multilateral Development Banks/MDB) make progress on their core mission of poverty reduction and inclusive economic growth. It’s also important that they take decisive action on global challenges like climate change, pandemics and conflict and fragility
In her visited to three countries in Africa and she saw firsthand the impact of these Banks direct financing of national development projects like these have connected millions to electricity and clean water, they’ve helped farmers get more crops to market and they’ve funded the construction of modern roads and bridges but even before the onset of the coveted pandemic.
The costs and benefits of addressing Global challenges are diffuse, they don’t all accrue to a single country. The MDB’s core model involves countries borrowing to make specific investments aimed at addressing development constraints in their own countries but that model is insufficient to meet the moment. Such a model will always under invest in addressing Global challenges since the benefits of investments in global challenges stretch far beyond the borders of the country where a given project takes place.
She along with other shareholders called for an evolution of the development Banks last fall. It’s time for these Banks to address Global challenges head on with the urgency and scale that is required. We’ve begun the evolution of the World Bank next we expect to take this agenda to the regional development Banks.
She speak specifically about our work on the World Bank we’re focused on evolving its vision incentives operating model and financial capacity with first the bank needs to expand its vision to include addressing Global challenges as an integral part of achieving its twin goals poverty reduction and shared prosperity. This does not mean shifting the bank away from its traditional work, it means expanding the work of the bank to better include addressing Global challenges.
These challenges are intertwined with alleviating poverty and supporting inclusive and sustainable development, second the bank must create the right incentives for countries to tackle Global challenges that includes lowering investment costs to make these types of projects more economically viable and the global community benefits from these investments.
The global Community should help bear their cost, for example we’re asking the bank to identify concessional resources available to countries to tackle Global challenges. These resources could incentivize the decommissioning of coal plants and protect displaced workers during a clean energy transition. They could enhance Health Systems to mitigate the spread of disease or they could support basic services for refugees and their host communities. The World Bank will also need to develop diagnostic tools to help countries understand how Global challenges affect their development and this will help guide project and financing decisions.
Third the bank must be bolder and more imaginative in its operational approach for example as we know that sub-national entities can sometimes have greater expertise and willingness to implement innovative projects so what if we made it easier for cities to gain access to funding for climate smart urban infrastructure operationally. We believe it’s also important for the bank to develop new measures of success such as clear targets that reflect its efforts to address both traditional goals as well as Global challenges.
Finally the bank must boost its Financial capacity by responsibly stretching its existing Financial Resources. Last year’s G20 report on development Banks Capital adequacy Frameworks provides a solid blueprint for this exercise. The United States is strongly supportive of exploring and implementing a range of the report’s recommendations and doing so quickly promising ideas for exploration include increased securitization of private sector portfolios or piloting the issuance of subordinated debt instruments to boost headroom just as important as additional financial capacity for the bank.
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