Structural Reforms In MDBs Are Must: Niti Aayog
Niti Aayog has called for the regulation of credit rating agencies and the restructuring of multilateral development banks (MDBs) to mobilise funds for sustainable growth in developing nations.
Aayog said in its report on a Green and Sustainable Growth Agenda that the way forward involves a new toolkit of policies and reforms in the structure of the MDBs to help them engage in better project implementation, capital mobilisation, risk sharing, joint financing and making sustainable infrastructure an asset class.
Niti Aayog has developed the report in collaboration with the Global Development Network (GDN), New Delhi and the International Development Research Centre (IDRC), Ottawa and has compiled this report after a G20 international conference on the theme in July this year, presided by India.
The report suggests that there is a global requirement of USD 3 trillion over the next decade to finance green growth and therefore it is urgent to mobilise both public and private finance.
Niti Aayog Vice Chairman Suman Bery said that though there is a need to finance sustainable growth, the willingness of rich countries to reach deep pockets of the world is being tested as they become cautious of the divided global peace and also their commitment towards pension for ageing population.
According to the report, MDBs are struggling with significant transparency issues, performance gaps and the impacts of geopolitics. The report further added that their efficiency and effectiveness are being undermined, leaving a sizeable void in the technical support and financial support required by most developing countries.
Commenting on the impact of credit rating agencies on developing nations aspiring to fund green and sustainable growth, the report said that the role of credit rating agencies should be regulated to ensure a fair assessments for developing countries.
The report also suggests the need to make special drawing rights (SDR) allocation less discretionary and rule-based to enable developing nations to benefit.
Raising concerns about rising protectionism, the report proposed reforming the World Trade Organisation (WTO), promoting regional trade agreements, plurilateral initiatives and comprehensive partnerships as a way forward.
