How ODI and global experts "shook up" the development ecosystem during the Spring meetings

On the sidelines of the World Bank-IMF Spring meetings, ODI, one of the world’s leading global affairs think tanks, brought together leaders in business, government, and the non-profit world to talk about solutions to some of the world’s most pressing issues – climate, poverty, debt reduction, green growth. ODI recently launched its presence in Washington, DC, so there will be more conversations to come.

The issues we confronted included:

• How to help Small Island Developing States (SIDS) respond to climate crises and emerge from debt
• How to better reach “underserved borrower groups” – e.g., SIDS, low income countries, fragile areas, smallholder farmers, small businesses, etc.
• What can we learn from country climate platforms, e.g., JETPs
• How can we make progress in recognizing the value of callable capital so that MDBs can use these billions of dollars to bigger!
• What does the future U.S. and European climate and trade cooperation look like?
• How to create the technology architecture for the future of public finance?

Here are some of the takeaways:

On reaching underserved borrowers:

“The development community loves silver bullets – there is no silver bullet. The answer will be an accumulation of marginal efforts which over time somehow erode this problem.”

-- Colin Buckley, Managing Director, British International Investment

“The reason we have a lot of requirements is not because we like to pay a lot of lawyers, but because we’re managing taxpayer resources. . . Other people are managing investor resources where those investors are trusting them to earn a return.”

-- Agnes Dasewicz, Chief of Investments, U.S. International Development Finance Corporation

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On building resilient SIDS:

“Debt is a persistent and unresolved issue for many SIDS. There is an undisputed link between high debt and external shocks, and a shift to less affordable non-concessional forms of debt. For the most part, debt has been well used by SIDS - there is little evidence of profligacy – and good examples of success in bringing down debt. But gains are coming at a cost in terms of foregone investment in resilience… We need the international community to go beyond debt deferral mechanisms and offer automatic debt cancellation following a large disaster.”?

-- Gail Hurley, Independent Consultant and RESI Affiliate

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“There’s a big opportunity to support debt transparency in SIDS… suffice to say the practices fall well short of where they should be globally. Correcting this is not something that’s easy to do, it’s not necessarily something that these countries have the capacity to do, and technical assistance in this space can be extremely helpful.

-- Mark Flanagan, Deputy Director of the Strategy Policy and Review Department, International Monetary Fund (IMF)

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On debt swaps in SIDS: “It’s not as simple as just the savings. You have to deploy the savings over long periods of time, sometimes even decades, in a way that is monitorable and meets the criteria that was set out in the beginning, or else you’re at the risk of having to pay more.

????????????????? -- Henry Mooney, Economics Advisor, Inter-American Development Bank

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On how to improve country climate platforms:

“Having led the Indonesian JETP Secretariat, and after visiting South Africa and Vietam, I can tell you that there is still a lot of soul-searching going on. How will the country platforms be different from business-as-usual? How do we go about sustaining public support? What structures will facilitate private investment at scale? I don't think anyone actually knows yet.”

????????????????? ???????-- Edo Mahendra, Head of JETP Secretariat, Indonesia

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“To mobilize at scale, we need to fully harness public sector organizations’ comparative advantages. MDBs bring three great comparative advantages. First, MDBs are very good at originating and arranging financing transactions that deliver development and financial results. Second, they have strong history of combining concessional and non-concessional public finance. Third, MDBs are very good at working with public sector to create viable and investable projects. Scale mobilization requires MDBs and DFIs arranging more transactions and distributing to investors, leveraging limited ODA in junior positions and mobilizing private investors in senior positions by investing in mezzanine positions and supporting the increase of viable and investable project sin the private sector. Let’s get MDBs to focus on their expertise and experience – we should not ask the tigers to grow spots!”

????????????????? ????????-- Christopher Clubb, Managing Director, Convergence

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On what needs to be done to mobilize callable capital:

Here's the?WBG press release and report on the procedures and governance of callable capital

“Every single bond that each of the MDBs have issued is more than completely covered by the sum of paid-in capital plus the guaranteed callable capital, and we think that’s a very powerful instrument to mitigate the risk that MDBs face. We think it is possible that it could be leveraged further to increase the lending capacity of MDBs.”

????????????????? -- Chris Humphrey, Senior Research Associate, ODI

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“Shareholders and MDB management should coordinate among themselves to engage with credit rating agencies about how callable capital is integrated into rating methodologies. Hopefully what is made clear from this session is that a AAA rating is not the only thing that guarantees a shareholder’s capacity to respond to a call. There are many other factors that can influence that decision and how credit rating agencies and MDB management themselves see it.”

????????????????? -- Bianca Getzel, Researcher, ODI

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“The way we designed this is for both many shareholders to move at the same time, and for multiple MDBs to move at the same time. There’s power in looking at this issue across the system.”

-- Margaret Kuhlow, Deputy Assistant Secretary for International Development Finance and Policy, U.S. Treasury

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On the technology architecture for the future of public finance:

“There was a strong sense in the room that the future looks federated, rather than centralized or decentralized. Yes, there are things that all governments do, but there are also important differences, both across governments and within governments. International organizations can support this shift by, identifying the standards needed to provide direction to the providers of these components (whether they are commercially provided, open source, or built in-house), and encouraging knowledge sharing on how to fund and deliver digital transformation in government.”?????

??????????????????????????????????? -- Cathal Long, Lead, Digital Public Finance Hub, ODI

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ODI Day during the World Bank-IMF Spring meetings brought together global leaders to discuss solutions and how to achieve them. We can expect more from ODI, as we continue to share knowledge and promote discussions with leaders so that they have the information that they need to know to drive action and the best decisions.