This year is big for development finance. It’s not just about continued World Bank reform and broader efforts to overhaul a dated international financial system, but it’s a year when a key new climate finance framework must be agreed upon and where economic headwinds and geopolitical tension will pile more pressure on indebted countries and make it harder to attract investment in lower-income countries.
“This is truly a historic year,” Kevin Gallagher, director of the Global Development Policy Center at Boston University, said at a recent Devex event. It is the 80th anniversary of the Bretton Woods Conference that created the World Bank Group, and it's 50 years since the adoption of the United Nations Declaration on the Establishment of a New International Economic Order, where developing countries called for a more equitable, interdependent system.
“We need a major transformation of the development finance institutions to make them bigger, to make the policies better, and to make them more equal so that there’s more voice and representation for developing countries,” Gallagher said. “The key metric for me is can we bend down the cost of capital.”