MDB reforms short of expectation, say Summers & Singh

Multilateral development banks (MDBs) have embarked on reforms but the pace and ambition fall "well short" of what was recommended and what is required, said Lawrence Summers and NK Singh, who were co-conveners of the G20 Independent Expert Group on MDB Reforms under India's presidency last year.

"In our view, the shortsighted approach of waiting until a crisis hits before acting forcefully on MDB reform will turn out to be a costly misjudgment. Time is not on our side," they said in a latest report card on MDB reforms.

Summers, president emeritus at Harvard University, and Singh, a former senior bureaucrat, had recommended a vision for better, bolder, bigger MDBs as a central tool to respond to the issues facing emerging markets and developing economies. The Brazilian G20 presidency this year has followed up by developing a road map of MDB reforms.



MDBs have put in place measures to expand annual sustainable lending but the volumes involved-about 30% of current lending volume-"fall far short of the tripling they need, given their enlarged mandate", they said.

The expert group under them had also recommended a tripling of concessional finance channelled through MDBs to the poorest countries, "but we see few signs of any meaningful rise", they said.

"Expanding mandates with insufficient financial resources will not work effectively," they said in the latest report.

Changing such development banks' relationships with the private sector has proven to be hard and difficult, they said.


"Despite some commendable improvements, for example on the expanded use of guarantees, the aggregate volume of private capital mobilisation-about $70 billion in the last year-demonstrates an incremental approach, not a radical transformation of business models," they said.

Major shareholders of these development banks should shoulder the main responsibility for this disappointing performance, they added.