Hundreds of billions in new loans on the table at Ivory Coast rally

World leaders and more than 450 development banks are meeting for two days to align lending with exiting the crisis and addressing environmental challenges. The third annual Finance in Common Summit takes place in Abidjan, Côte d’Ivoire amid a global economy facing multiple shocks and calls for increased lending capacity of development banks.

“What sets this third Joint Finance apart from the previous two is that there are now proposals to push development banks to do more,” said Eric LeCompte, executive director of religious development group Jubilee USA. Network. “Development banks play an important role in crises. With the pandemic, the war in Ukraine, inflation, food prices and climate challenges, we will ask more of them.”

In July, a group of experts established by the G20 proposed changes to how banks determine lending risk, assess available capital and communicate with rating agencies. Frannie Léautier, Senior Partner at SouthBridge Group and CEO of SouthBridge Investments, chaired the group, made up of fourteen experts from various backgrounds. According to the panel, global development banks can lend hundreds of billions more to poor countries. G20 officials met on the proposals last week.

“The report shows a path to significantly expand development bank lending,” noted LeCompte, which follows G20 policies.

Earlier this month, Treasury Secretary Janet Yellen called on multilateral development banks to devise new approaches to meet global challenges.

“Development banks need reforms to their operations, practices and lending models in order to deal effectively with the current crises,” LeCompte said.

African Catholic Bishops and religious leaders gathered in Accra, Ghana last month and said development banks can use more capital to provide loans in times of crisis, but lack the resources to meet the challenges of the 21st century. In a letter to President Biden early last year, Jubilee USA Network and the United States Conference of Catholic Bishops called for a significant increase in lending volumes from multilateral development banks, through a combination of increasing and improving the use of capital. A similar letter was sent to more than 200 religious groups echoing the need to build the capacity of development banks.

The G20 is working on processes for rich countries to pay some of their pandemic emergency currency, or special drawing rights, to poor countries. The IMF has created $650 billion in SDRs, to help countries respond to the pandemic, of which advanced economies have received more than $400 billion. This month, the IMF launched operations for a new lending window, the Resilience and Sustainability Trust, which will finance its loans with the help of special drawing rights that rich countries share among themselves.

“We need to find ways to get more funding for development banks,” LeCompte said. “Donations of special drawing rights from rich countries to development banks can help us reduce the current financing gap.”

Read Jubilee USA and the United States Conference of Catholic Bishops’ letter to President Biden here.

Read ‘The Independent Capital Adequacy Review of MDBS: Strengthening the investment capacity of MDBs’ here.

Jubilee USA Network is an alliance of more than 75 American organizations and 750 faith communities working with 50 global Jubilee partners. Jubilee USA is building an economy that serves, protects and promotes the participation of the most vulnerable. Jubilee USA wins critical global financial reforms and secures over $130 billion in debt relief for the world’s poorest people. www.jubileeusa.org

About Florence L. Silvia

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