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International Monetary Fund and World Bank believe that urgent reformation is needed for development finance system. They also believe that they need more money to deal with disaster. The major private and public group made a statement in Thursday, 21st of April in Washington, where it was signed by four representatives.

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The Global Reformation

The (global) development finance system is in dire need of reformation. It also needs more (private) capital to deal with overlapping and multiple crises that are responsible for making 250 million of people having to deal with extreme poverty.

The statement was signed in Washington D.C by Woochong Um (Asian Development Bank managing director general), Gordon Brown (former British Prime Minister), Andrew Steer (Bezos Earth Fund president), and Dr. Rajiv Shah (Rockefeller Foundation president). It calls for drastic changes and transformation that can be used to help developing countries, especially related to COVID-19, climate change, massive debt burdens, and other crises.

The joint statement was issued after a convention had taken place in Washington. The convention was attended by 60 senior development finance experts and government officials, where three-hour dialogue was taking place. This dialog itself was a sideline of the International Monetary Fund and World Bank spring meeting.

The statement is a call on private sectors and governments to mobilize development finance at the needed sale and pace, so appropriate response can be made for the compounding crises. They believe that it’s the only working way to put the world on its track to obtain SDGs (Sustainable Development Goals) and also Paris Climate Agreement.

The World’s Situation

IMF has slashed its global economic growth’s forecast to a full percentage point. They believed that the war between Russia and Ukraine had been responsible for the inflation. The condition is also threatening. It’s possibly widening the gap between the poor and the rich for many years to come.

Today’s condition with COVID-19, increasing fuel and food crises, cascading burdens of the debt, and also extreme weather conditions have reversed the global convergence and growing prosperity that has been going on for the past 80 years. As if it weren’t enough, Russia vs Ukraine war was mainly responsible for the global food insecurity since prices are going up, especially for sunflower oil, fertilizers, soybeans, corn, and wheat. With huge needs and inequitable (and scarce) public finance, things aren’t easy.

Solution and Outcomes?

The Group of Seven (advanced economies) should be working together with the bigger group of 20 major economies, pledging their support for energy transition in South Africa. They should also push Indonesia to make a deal on the energy transition partnership.

Major economies are advised to use innovative instruments, like proposing IFF (International Finance Facility) and channeling their IMF SDRs (Special Drawing Rights) reserves for the developing countries. They believe that boosting funds from various development banks, as well as creating facilities to attract private capital, should be able to help the developing countries. These countries are able to address the pandemic, take climate action, and manage the (compounding) crises related to debt, fuel, and food.

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