Finance Secretary Benjamin E. Diokno called for reforms and increased concessionality in the financing models of multilateral development banks (MDBs) to address ongoing global challenges during the Intergovernmental Group of Twenty-Four (G-24) Ministerial Meeting on October 10, 2023.
The G-24 Meeting kicked off the Philippine delegation’s engagements during the 2023 Annual Meetings of the World Bank and International Monetary Fund (WB-IMF), with the theme “Global Action, Global Impact”, in Marrakech, Morocco on October 9 to 15, 2023.
The Bureau leading the G-24 is chaired by Côte d’Ivoire Finance Minister Adama Coulibaly, with Secretary Diokno serving as First Vice-Chair and Argentina Treasury Minister Sergio Massa as Second Vice-Chair.
With the theme, Reforming the Multilateral Financial System for the Challenges of the 21st Century, the meeting allowed members and observers to discuss key areas where international financial institutions can scale up their support to emerging and developing economies (EMDEs).
“The response of multilateral development banks to the COVID-19 pandemic and post-pandemic recovery has stretched their lending capacity. This threatens their ability to respond to ongoing crises, including climate-related hazards, food insecurity, public health risks, and learning poverty,” Secretary Diokno said during his intervention.
In light of these difficulties, Secretary Diokno welcomed proposed additional measures that could further increase the financing capacity of MDBs.
For one, he acknowledged the WB’s successful implementation of recommended measures by the G20 Capital Adequacy Framework—creating up to US$ 50 billion of additional lending capacity over the next 10 years.
While there are innovative solutions such as guarantee facilities to enhance MDB lending capacities, the Finance Secretary cautioned the use of hybrid capital on the borrowing cost of member countries in consideration of the high interest rates globally.
“In this context, we welcome the proposed additional measures that could further increase the WB’s financing capacity, especially towards providing concessionality for low- and middle-income countries,” Secretary Diokno said.
To scale up support for EMDEs, the Finance Secretary proposed that MDBs make available better financing terms especially amid rising interest rates and increasing costs of international borrowing.
“The rapid increase in the level of the Secured Overnight Financing Rate (SOFR) poses significant risk burdens to IBRD countries such as the Philippines,” he said.
In light of the increasingly intensifying climate crisis and the inordinate costs climate-vulnerable countries bear, Secretary Diokno urged MDBs to provide more concessional financing for climate adaptation and mitigation projects in support of the US$ 4 to 6 trillion investment requirement for the global transformation to a low-carbon economy.
“Better concessionality in climate finance is a necessary step towards climate justice,” he emphasized in his intervention.
The body then approved the G-24 Communiqué, a written statement that conveyed the position of G-24 members on: reforming the financial models and terms of MDBs to ease access to financing; enhancing the voice and representation of member countries, particularly those in Sub-Saharan Africa; promoting durable debt resolution measures to address debt distress; amplifying support for climate finance; encouraging effective domestic resource mobilization for sustainable development financing; and supporting a robust multilateral trade system.
To conclude the meeting, Minister Aldaba introduced Secretary Diokno as the new Chairperson of the G-24 for 2023 to 2024. The Finance Secretary served as the First Vice-Chair of the G-24 Bureau in 2022-2023 and Second Vice-Chair in 2021-2022
“Together with the First Vice Chair, represented by Argentina, and the Second Vice Chair, represented by Nigeria, I look forward to putting our thoughts together and building consensus on the most pressing development issues confronting the world today, considering the diverse contexts of our respective countries,” he said in his acceptance speech.
The G-24 coordinates the position of developing countries on monetary and development issues in the deliberations and decisions of the Bretton Woods Institutions, namely the WB and the IMF. In particular, the G-24 focuses on issues on the agendas of the International Monetary and Financial Committee (IMFC) and the Development Committee (DC), as well as in other relevant international fora.
G-24 members include Algeria, Argentina, Brazil, Colombia, Congo, Côte d’Ivoire, Ecuador, Egypt, Ethiopia, Gabon, Ghana, Guatemala, Haiti, India, Iran, Kenya, Lebanon, Mexico, Morocco, Nigeria, Pakistan, Peru, Philippines, South Africa, Sri Lanka, Syria, Trinidad and Tobago, Venezuela, and China (Special Invitee).