A top priority is to push ahead with an ambitious reform of our multilateral development banking system, building on current momentum. We are calling on development banks to take responsible steps to make better use of existing resources and increase financing capacity and mobilization of private capital based on clear strategies and objectives related to the contribution of private finance and the mobilization of domestic resources. These economic resources are fundamental, but the reform in question goes far beyond money and should provide a more effective operating model, based on a country-oriented approach. Furthermore, our development banks need to work together as an ecosystem, in synergy with other public agencies and streamlined vertical funds and, where necessary, with philanthropists, sovereign wealth funds, private finance and civil society, to achieve maximum impact. Once this goal is achieved, we may consider capital raises where it is possible to maximize results and strengthen the institutional capacity of each organization.
Technologies, skills, sustainability and public and private investments will underpin our partnerships aimed at promoting technology transfer and a free flow of scientific and technological talent, as well as contributing to an inclusive, open, equitable and non-discriminatory economy. We will promote a sustainable and inclusive investment agenda in emerging and developing countries, based on economic added value and transformation at the local level, such as for fertilizer value chains. This comprehensive approach will require new metrics to update our reporting and transparency tools.
As public finances will remain crucial to achieving our goals, we should start by strengthening our tools (the International Development Association, the IMF trust funds for poverty reduction and growth, and for resilience and sustainability, the International Fund for Agricultural Development, the Green Climate Fund and other subsidized branches of our banks, as well as the Global Shield against Climate Risks). We recognize, however, that to achieve our development and climate goals – including as part of the fight against hunger, poverty and inequalities – adapting to climate change and avoiding, containing and coping with losses and damages, new, innovative and sustainable sources of financing will be needed, such as debt buy-backs, increased commitment from sectors thriving from globalisation, and more reliable biodiversity and carbon credit markets.
Increasing resilience through a full range of financial instruments is a priority. We need a stronger global safety net, based on pre-established strategies, to improve climate change adaptation and mitigation, especially when disaster strikes. This implies climate- and disaster-resilient deferral mechanisms, insurance networks and emergency response finance, including a more stable humanitarian aid financing model.
Achieving our development goals, including climate change mitigation, will also depend on increasing private capital flows. This will require greater mobilization of the private sector, with its financial resources and innovative strength, as outlined in the G20 Compact with Africa initiative. It will also involve improving the business environment, implementing common standards and appropriate capacity building, and reducing perceived risks, for example in foreign exchange and credit markets, which may require public sector support and sharing of reliable data. In general, our system will have to favor a reduction in the cost of capital for sustainable development, also through the ecological transition in emerging and developing countries.