MDBs should partner private cos for development: Report
New Delhi: Development banks should change their approach in order to bring the private sector into the centre of efforts to mobilise finance for sustainable development strategies, according to the independent panel that advise G20 nations on improving the balance sheets of multilateral institutions. In the report titled ‘Strengthening multilateral development banks-the triple agenda’ presented to G20 finance ministers and central bank governors, the nine-member committee argued that development banks should engage with the private sector in a new way, including by co-creating investment opportunities and programmes.
Fifteenth Finance Commission chairperson N.K. Singh and former US treasury secretary Lawrence Summers were co-convenors of the panel.
Development banks should also prioritize support for helping governments reduce policy and regulatory risks that impede private investment, the report said. Making a strong case for development banks to partner with the private sector, the committee said that there is considerable innovation and energy behind new ways of attracting private capital into sustainable infrastructure, and development banks must complement, rather than compete with, these efforts.
The panel noted that today, multilateral development banks only mobilise $0.6 in private capital for each dollar they lend on their own account. “They should aim to at least double this target," the report said.
Private sector capital mobilization requires a fundamentally different approach. “We anticipate that private financing amounting to $740 billion per year will be required to reach overall goals for additional climate and sustainable development goals-related finance, an increase of $500 billion over the 2019
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