Private capital a challenge for MDBs: NK Singh

livemint.com:

GANDHINAGAR : Harnessing private capital is a key challenge for multilateral development banks (MDBs) as the risk-return ratio is not feasible, says NK Singh, who along with former US treasury secretary Lawrence Summers is the co-convenor of a G20 expert group on strengthening MDBs. The first part of the report on developing MDBs by the expert committee will be made public today. India is trying to leverage the G20, of which it holds the rotating presidency this year, to make MDBs more effective for loans to developing countries.

Singh, who serves as the chairman of the Fifteenth Finance Commission, added that states will need to enhance revenue and improve quality of expenditure to attain more growth. Edited excerpts from an interview:US treasury secretary Janet Yellen has said measures underway will help MDBs to raise $200 billion over a decade. If you go through the terms of reference for MDBs, first is the mandate, and then the vision and what is expected.

We first address that (in the report). Suppose after addressing it, we come to the conclusion that X (amount) is needed, the next story then is how that X (amount) has to be financed. The MDBs have two big components—one is the domestic resource mobilisation, which is the major part and requires action from (G20) member countries.

Some member countries are better equipped to do it. Domestic resource mobilization basically means growth, revenue buoyancy, structural reforms, economic policy changes, etc. The other component is how to increase lending capacity within MDBs.

It’s in the range of $120 billion (annually). The idea was to triple it (in a decade to over $300 billion). So you break that down and what amount of this is concession financing.