The SDG Agenda, the sovereign debt crisis and the climate crisis will need brave leadership from not just individual governments of both the global north and the south, but also groups such as the United Nations, the G20, G7 and others, to closely negotiate tough decisions that can have enough impact on the triple inequality – of wealth, carbon and power. For this, the Multilateral Development Banks (MDB) are unique in that they bring with them the firepower and balance sheet size to back big- budget funding needs on the back of the above tough decisions that need to be made. Given their multilateral ethos, they are also uniquely placed to fund solutions for global public goods in a systematic and in a least-conflicted manner. However, their history and their organizational decision- making mechanisms may make these institutions too unwieldy to deliver solutions in time to have high impact for the entire planet. An inability to deliver this imperative will be catastrophic – as this would see a global rise in humanitarian and ecological disasters, and the emergence of more regional efforts that will likely prioritize regional interests over solving for problems of a global nature, and distinctly ‘zero-sum’ interactions between countries that will leave the planet and its people worse off. This also will indicate a decline in the global relevance of the MDBs themselves. Such a scenario is imminent given many countries are being pushed towards choosing between two divergent paths – whether to collaborate, including via multilateralism and its rule-based frameworks, or whether to embrace ‘economic decoupling’ in order to achieve greater risk mitigation for themselves1.
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1. “The stark de-risking choice facing economies”, Mohamed El-Erian. Financial Times, May 25, 2023