Markets Wired

As Prepared for Delivery 

Two years ago on the eve of the Annual Meetings, I called for the evolution of the multilateral development banks. Today, I am glad to be here with President Banga, Lord Malloch-Brown, and Minister Musokotwane to lay out what we’ve achieved and to reaffirm our commitment to sustaining momentum.

I called for evolution because, as we began to exit COVID recessions around the world, I and many others saw that the stakes were high. There had been insufficient progress or troubling reversals on many of the Sustainable Development Goals. And we faced urgent global challenges that could quickly unravel hard-earned development gains and diminish prospects for the future: from climate change, to pandemics and other global health emergencies, to fragility, conflict, and violence.

I also had a strong conviction about the vital role that the MDBs could play at this crucial moment. Over decades, they have responded to their shareholders; built trusted relationships with developing country governments; and developed and deployed a wide range of tools, from financing to policy support to technical assistance. I’ve gotten to see their impact firsthand in my travels as Treasury Secretary, from an education data processing center in India recognized for driving improvements in educational outcomes that I visited with President Banga to a cutting-edge university in Morocco where I marked the one-year anniversary of MDB Evolution during last year’s Annual Meetings. 

I saw, too, however, that the MDBs needed to change to meet the nature, urgency, and scale of today’s challenges. They could focus more on global public goods because achieving development outcomes at the country level is inextricably linked to addressing global challenges. They could better utilize their balance sheets and harness private sector resources. They could act faster and work more as a system.

My call resonated widely because despite a range of perspectives on what exactly was needed, there was overwhelming consensus on the need for change. Very quickly, diverse stakeholders stepped up. President Banga and leaders across the MDB system led. Governments, non-governmental organizations, research institutions, and the private sector became involved, helping shape Evolution and then continuing to support it. Successive G20 presidencies kept MDB reform high on the agenda. Staff across the MDBs bought in and started taking forward the hard work of implementation.

We focused the Evolution agenda on four key areas in need of change: mission, incentives, operational models, and financial capacity. We’ve seen progress in each. The World Bank has a new vision and mission—“To create a world free of poverty on a livable planet”—and regional development banks have shifted missions as well. There are new incentives like updated corporate scorecards that focus the banks on outcomes, impact, and mobilizing private capital. World Bank projects are moving more quickly to approval, and IDB Invest has a new originate-to-share model to bring in private sector investors. We’ve also drastically increased financial capacity. Across the MDBs, responsibly stretching balance sheets and innovative measures will enable $200 billion in new lending capacity over the next decade, with a potential additional nearly $160 billion from other already identified measures. 

Let me provide some examples of what these changes actually mean for countries around the world.

Nineteen countries have adopted a new option that allows them to repurpose World Bank funds for emergency response so that they can better support their citizens in times of crisis. For example, they could shift resources for a long-term infrastructure project to rebuild critical infrastructure after a natural disaster.

Other countries are taking advantage of innovative tools like climate resilient debt clauses. In July, St. Vincent and the Grenadines chose to delay its repayments to the World Bank for two years, freeing up funds to support disaster response when it mattered most.

Making good on lessons learned from the COVID-19 pandemic, improved communication and coordination across the MDBs and with other institutions will enable faster and more effective responses to global health crises. The World Bank is working with the World Health Organization and the G20 Joint Finance Health Task Force to track financing commitments to mpox response so that resources can be connected to needs. And the Bank, the IMF, and the WHO have just announced how they will jointly help countries access Resilience and Sustainability Trust resources to close pandemic preparedness gaps.

Outside of crisis contexts, countries are increasingly addressing the underlying drivers of fragility and conflict, such as in the case of an African Development Bank loan to the Democratic Republic of Congo to invest in increasing agricultural productivity in communities that had been displaced.

Efforts to drive private capital mobilization are also starting to yield results. New data from the Global Emerging Markets Risk Database enabled an investment fund focused on the SDGs and climate finance to attract over $1 billion in financing, including from a major Dutch pension fund. The World Bank’s push to mitigate foreign exchange risk through more local currency lending is leading to projects like a $200 million financing package for a telecommunications company in Senegal that will help increase digital connectivity. And the Asian Development Bank’s placement of more private sector-focused staff in country offices will facilitate identifying new opportunities for private sector engagement.

Taking inspiration from these and many other examples, we will keep moving Evolution forward this week and in the coming months. The SDGs challenge us to eradicate extreme poverty, strengthen health systems, and protect the planet. President Banga has set ambitious goals, such as to work with the African Development Bank to bring electricity to 300 million people in Sub-Saharan Africa by 2030.

To meet these goals and deliver enduring change, we need to double down on implementation. This includes strengthening partnerships in the context of fragility, conflict, and violence and embedding new ways of working to achieve climate outcomes and increase pandemic preparedness. We must also maintain focus on increasing private capital mobilization and using capital as efficiently as possible.

The work ahead isn’t just for the MDBs to undertake. Shareholders must also play active roles. This is why the United States strongly supported capital increases for the EBRD and IDB Invest, a callable capital increase for the AfDB, and the largest-ever replenishment of the Asian Development Fund. It is also why we now intend to do all we can to deliver a robust policy and financial package for the upcoming IDA replenishment.

We cannot turn back. Eighty years ago at Bretton Woods we created institutions that have shaped development outcomes around the world. Today, the MDBs are the best option for high-quality and transparent development financing at the scale we so desperately need. But the world has changed, and it’s incumbent on each generation to make sure these institutions change with it.

I’ve been honored to be part of delivering on that charge over the past two years. And I believe that the work we’ve done and will continue to do will endure long after I and those here leave our current roles—through better, bigger, and more effective institutions that meet today’s most pressing challenges and pave the way for better outcomes for decades to come.

Thank you.

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