G20 advances consensus on reforming Multilateral Development Banks and broadening discussions on foreign debt

In Fortaleza, the G20 agreed to include debtor countries in discussions on foreign debt and to reform the Multilateral Development Banks (MDBs) to enhance investment capacity in Global South countries. Brazilian proposals on exchanging debts for investments and including debt suspension clauses for extreme weather events were also discussed.

Brasil's priorities at the G20 —specifically the inclusion of debtor countries in discussions on external debt and the reform of Multilateral Development Banks (MDBs)— gained consensus among member countries during the recent meeting of the forum's International Financial Architecture working group. The meeting was held this week in Fortaleza, the capital of Ceará.

"We have reinforced the consensus by incorporating the perspectives of debtor countries into the traditional creditor-focused consultations. Brasil has introduced innovative proposals, such as debt-for-investment exchanges to alleviate the debt burden for debtor nations, and debt suspension clauses in the event of climate disasters," explained Ambassador Tatiana Rosito, coordinator of the G20 Finance Track.

The Ambassador emphasized that the meeting, which included African experts and representatives from Benin, Kenya, Nigeria, the African Development Bank, and G20 member countries, was "an important step in building a global consensus on financial and development issues."

Better, more agile, and effective MDBs

Representatives of MDBs and regional banks also participated in the debates, emphasizing the pivotal role these institutions play in driving essential transformations and addressing global challenges. Rosito noted that the group made progress on a roadmap to enhance these banks' capacity to mobilize substantial financing resources to meet the United Nations Sustainable Development Goals, the targets of the Paris Agreement, and the objectives of the UN Framework Convention on Climate Change.

The meeting also discussed the relationship between the WG and the task forces established by the Brazilian presidency of the G20, under the leadership of President Luís Inácio Lula da Silva. "These task forces aim to provide fresh impetus, not only through programmatic mechanisms to better understand how to achieve the objectives of ending hunger and poverty and combating climate change but also by mobilizing resources. In this context, the role of multilateral banks is crucial," explained Ambassador Rosito.

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