Scaling Development Finance for Our Common Future
The international community needs to annually mobilize trillions of dollars in order to close infrastructure gaps and meet the goals and commitments of the Group of 20 (G20) and the UN 2030 Sustainable Development Goals, (SDGs) and to date, private sector and national governments are falling far short of financing these goals. Development finance institutions (DFIs) such as national and sub-regional development banks and multilateral development banks have a unique role to play in closing the finance gap, as these institutions can take a longer-run societal view toward financing, uphold and demonstrate standards of excellence and can mobilize commercial financing in tandem. However, many DFIs have been under-capitalized and under-performing, with little coordination across DFIs toward shared climate and development goals.
A new policy brief published by the T20 Task Force on International Financial Architecture for Stability and Development calls on G20 leaders to task DFIs to commit to scaling up resources by 25 percent, to calibrate new financing to international commitments to mitigate climate change and the SDGs and to work together as an inclusive system toward achieving these shared goals.
Authored by Kevin P. Gallagher, Leandro A. Serino, Danny Bradlow and Jose Siaba Serrate, the brief argues for an increase in the base capital of DFIs, an expansion of their lending headroom and a mobilization of capital from the commercial sector. The authors also explain that adapting to country and regional circumstances and calibrating new finance to the SDGs and the Paris Agreement on climate should be the guiding rationale for new financing. Finally, they argue the G20 should encourage the establishment of a multi-stakeholder forum that includes not solely national governments and MDBs, but also the broader set of DFIs, the business community, civil society,and other key stakeholders into a cooperative process.Read the Policy Brief