In view of the World Bank being capital-constrained, Finance Minister Arun Jaitley today emphasised on the need for re-capitalising the Bank to enable it to meet Sustainable Development Goals (SDGs) and twin goals of eliminating extreme poverty by 2030 and boosting shared prosperity.
“Unfavourable global scenario has made the achievement of twin goals of the World Bank Group and the ambitious SDGs even more challenging. Achievement of these goals requires trillions of dollars of development financing. This makes the role of the World Bank group even more critical – both as a provider of finance and knowledge,” he said.
Jaitley was representing the Constituency of Bangladesh, Bhutan, India and Sri Lanka, at the 94th Meeting of the Development Committee (DC), the Ministerial-Level forum of the World Bank Group and IMF for inter-governmental consensus building on development issues, here yesterday.
The meeting focused on the ‘Forward Look’ exercise carried out by the World Bank and discussion on the Dynamic Formula of Shareholding of member countries in the International Bank for Reconstruction and Development (IBRD), a member institution of the Bank.
“In view of the Bank being capital constrained today, there is a need to expand the role of not only IDA, but also IBRD and IFC to enlarge the lending programme of the Bank Group,” he said.
For instance, in the case of India, during the last fiscal year, fresh commitments delivered were only USD 3.8 billion as against the requirement of USD 5-7 billion.
During the last spring meeting, Jaitley had called for a USD 100 billion bank.
The ‘Forward Look Paper’ has proposed annual lending of USD 40 billion per annum by IBRD. It also proposes doubling of IFC’s annual investment capacity. This is necessary in view of the increasing role which IFC needs to play in ramping up private sector’s capacities in developing countries.
“Increased financing measures need to be coupled with renewed efforts to find innovative solutions, active pursuance of knowledge sharing, coordinated responses with the private sector, other development partners and international organisations,” Jaitley said.
On growth, the finance minister said: “Our constituency countries have displayed resilience and growth in this challenging environment where India is likely to grow at more than its last year’s 7.6 per cent, Bangladesh at 6.3 per cent, Sri Lanka at about 5.3 per cent and Bhutan at 6.8 per cent.”
He shared the assessment that the Bank should not only be bigger but be more agile, efficient and less expensive to do business with.
The Bank’s active promotion of South-South cooperation, increased use of Country Systems and a pragmatic implementation of environmental and social standards would help considerably in making it a better Bank, he added.
Jaitley also made the point that the final outcome of the World Bank shareholding “must not lose sight of the raison d’etre of the realignment – to increase the voice and voting power of developing countries, which we had clearly stated in 2010 and reiterated in 2015 DC Communiques”.
The draft report, he said, dilutes this laudable goal by merely stating that the voting power of the developing and transition countries (DTCs) should not be reduced.
“Further, there should be at least 2 per cent increase in voting power of DTCs at the conclusion of the process,” he suggested.
Jaitley said the International Development Association (IDA), part of the World Bank, is the single-most important concessional platform to meet the needs of low-income countries.
“Therefore, we fully support the replenishment effort that aims at a base package of USD 75 billion for IDA 18 replenishment… I am happy to note that unreasonable burden which ‘Acceleration Clause’ imposed on the graduates has been recognised and it is proposed to suspend its operation for the present. This should in fact be done away with entirely,” Jaitley said.
According to Jaitley, the World Bank stands at a crossroads as it has not only to reinvent itself as it embraces the challenges but design and execute its projects efficiently, nimbly and innovatively like never before.
“As shareholders, let us not shy away from adequately resourcing the bank and empowering the bank to enable us to meet SDGs and our twin goals,” he said.
While addressing the gathering at forums like the Goldman Sachs Growth Markets Conference and the FT-Citi Forum, he elaborated on the significant improvement in macro-economic fundamentals of investment and growth in the Indian economy.
Jaitley also highlighted the major transformative initiatives taken by India which have “created a positive” business environment for Indian and global investments.
He also held a bilateral meeting with Philip Hammond, UK Finance Minister. The discussion centered on the various areas of mutual interest and cooperation.
Meanwhile, on the sidelines of IMF/WB annual meetings, Economic Affairs Secretary Shaktikanta Das held bilateral talks with his counterpart from Israel, during which both sides discussed the issues related to BITs, FDI and future avenues of partnership in agriculture.
In particular, Israel expressed keen interest in learning from India’s experiences in PPPs and ease of doing business, the release said.
Das, in a series of tweets, said there were “very productive meetings” during the visit to US and Canada.
“…Investors’ interest in India is growing. Both FDI and FPI,” he noted.
He added that the emerging view among investors in the US and Canada is “India is highly under rated”.
Das said further: “International rating agencies need to listen to investors in their own countries,” he said, adding, “No complacency in the government. Will continue to do more.”