Development Finance Roadmap for G20 Summit 2018

All eyes turn to Argentina, the host of this year’s G20 Summit, as leaders from the 19 biggest economies around the world and the European Union prepare to meet on Thursday and Friday. Cumulatively, these nations account for 85% of the world GDP and ⅔ of the world population.

This comes in succession of the T20 Argentina Summit in September, where Think20 (T20), a group made of think tanks and associated with G20, presented their policy recommendations for the G20 Summit to Mauricio Macri, the President of Argentina.

Earlier this year, Kevin P. Gallagher, Professor of Global Development Policy at Boston University’s Pardee School of Global Studies and director of the Global Development Policy Center was nominated as the co-chair of International Financial Architecture for Stability and Development Taskforce. The taskforce addressed topics related to the design and improvement of the international financial architecture and offered policy advice on monetary policies for both developed and developing countries.

Gallagher co-authored a policy brief along with Leandro A. Serino of T20 Argentina, Danny Bradlow of the University of Pretoria, and José Siaba Serrate of the Argentine Council for International Relations (CARI) on scaling development finance and the role of development finance institutions (DFIs). It advises the G20 to scale up the resources of DFIs by 25 percent on condition that DFIs are re-calibrated in order to achieve the Sustainable Development Goals (SDGs) and Paris Climate Agreement by 2030.

The policy brief recognizes that the changing landscape of global financial architecture and unique role DFIs can play in closing infrastructure gaps and meeting these broader goals and commitments.

According to a GEGI policy brief authored by William N. Kring and Kevin P. Gallagher, the scale of financing available for short-term liquidity needs has increased more than threefold and the scale of development finance has roughly doubled in the past decade. This growth is led largely by developing economies – 63 percent of all liquidity finance and 80 percent of all development bank finance is housed with the emerging markets and developing countries (EMDs).

However, the new capital still falls short of meeting the SDGs or stemming the next global financial crisis. According to the brief, the scale of DFIs have not kept up with the size of global finance and global development needs. Like the T20 brief, Gallagher and Kring’s paper also calls for greater financing and coordination.

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