Sitharaman urges stronger MDB role as Global South faces climate, fiscal, and geopolitical shocks

Mint

3 days ago

New Delhi: Finance minister Nirmala Sitharaman on Friday urged multilateral development banks (MDBs) to adopt a stronger and more targeted approach in supporting the Global South, which faces mounting fiscal pressures, escalating climate risks, and deepening geopolitical uncertainty.
Speaking at the opening ceremony of the 10th annual meeting of the New Development Bank—formerly the BRICS Development Bank—Sitharaman said MDBs are uniquely positioned to complement national efforts by mobilising public and private capital, offering concessional financing, and deploying sophisticated risk mitigation tools.
'MDBs have a distinctive comparative advantage in catalysing both public and private investments by offering a package of technical expertise, concessional financing, and effective risk mitigation tools, thereby widening our policy options,' she said. MDBs also play a pivotal role in helping countries manage rising uncertainty, she added.
These institutions have become critical allies for developing economies navigating a convergence of economic strain, environmental vulnerabilities, and geopolitical shocks. By crowding in private capital and offering financial and technical expertise, MDBs expand the policy toolkit available to the Global South.
As momentum builds for reimagining the global financial architecture, MDBs are increasingly seen as central to closing investment gaps and supporting sustainable, inclusive growth across emerging markets.
'Mobilising private capital is key to sustaining growth,' Sitharaman said. 'Given the limited fiscal space and competing demands for public capital expenditure, the New Development Bank should play a catalytic role in unlocking private sector capital.'
She also called for a sharper focus on small businesses: 'Special focus must be placed on tailored support for small and medium enterprises, especially women-led enterprises, to ensure inclusive participation, economic development, and promote gender equity.'
Under India's G20 presidency, the NK Singh-Larry Summers expert group had called for bold reforms to make MDBs more agile, effective, and aligned with the 21st century's challenges. The panel recommended moving beyond traditional lending to focus on global public goods such as climate and health, and using balance sheets more innovatively to unlock private capital.
'The Capital Adequacy Framework and the 'better, bolder, bigger' reforms outlined during India's G20 presidency in 2023 offer actionable steps,' Sitharaman said. 'Continued focus on accountability, responsiveness, and stakeholder trust must remain a priority to ensure long-term sustainability.'