Ideas to Action:
Independent research for global prosperity
CGD colleagues raised questions and concerns at the time of the announcement. In weighing his possibly presidency, an especially salient question becomes: can Claver-Carone deliver a general capital increase (GCI)?
The latest G20 finance ministers meeting concluded with no major progress on debt relief for the world’s poorest countries, and a few setbacks. To date, no country eligible for the G20’s Debt Service Suspension Initiative has requested a moratorium on their private sector debt. We are at an impasse.
Rather than providing relief on repayments from existing loans, IDA’s debt sustainability framework adjusts future financing from loans to grants for countries at high risk of debt distress. But what happens to IDA’s loans-to-grants model when a large number of IDA countries trigger the risk thresholds? Can IDA afford its commitment to debt sustainability?
Let’s unpack our arguments for why a debt standstill would be the wrong move for IDA at this point in time.
DFIs are well positioned to address five pressure points in the COVID-19 response that need financing. Let’s unpack these one by one.
The G20 is calling on commercial creditors to follow their lead and extend a moratorium on their debt. But if past is precedent external commercial debt could be shaping up to be major fault line in the debt relief process moving forward.
It is often said that governments “fight the last war” during times of economic crisis. But based on David Malpass’ remarks from last week’s G20 Finance Ministers call, it appears the World Bank is preparing to fight the wars of the 1990s by revamping old—and largely discredited—crisis policy prescriptions to address what is likely to be a severe economic downturn caused by the COVID-19 pandemic.
In retrospect, the scale up in MDB financing during the 2008-2010 crisis, though significant, now looks conservative as we consider the potential scale of damage from the current COVID-19 pandemic. To put the question bluntly, if the human and economic devastation follows a worst-case scenario, just how much could the MDBs do to respond? We attempt to answer that question by assessing the legal, rather than prudential, constraints on MDB lending.
The new US International Development Finance Corporation has opened its doors! And with that, CGD is launching the “DFI Dashboard”—an interactive tool for comparing the lending practices and policy frameworks of DFC and eight other development finance institutions.
Why isn’t the African Development Bank Group bigger? Clemence Landers and Nancy Lee have a proposal to reform the bank and increase its size and impact.
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