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Global leaders attending this week’s Paris Summit for a new global financing pact have praised the African Development Bank for its role in boosting the Special Drawing Rights of low-income countries.
According to the leaders, the solution would enable rich countries to reallocate part of their Special Drawing Rights to low-income countries through multilateral development banks.
They stated that the technical solution would preserve the asset reserve status of the SDRs and unlock hundreds of billions for Africa.
A statement from the AfDB explained that the bank and the Inter-American Development Bank had been leading calls for the reallocation of the SDRs through multilateral development banks to help rebuild livelihoods due to the impact of climate change and other global challenges.
While speaking at the pre-summit forum’s opening on Thursday, the United Nations Secretary-General, António Guterres said, “The African Development Bank has launched an initiative to channel SDRs to multilateral development banks, which would increase their impact five-fold—this initiative should be a source of inspiration.
“They can put a price on carbon. They can end fossil fuel subsidies and reallocate this funding towards more sustainable and productive use.”
The statement noted that French President, Emmanuel Macron, convened the summit to find a roadmap for easing the debt burdens of low-income countries while freeing up more funds for climate financing.
Macron suggested four pillars that should underpin the new global financial pact, stressing that it must have the support of the people most affected by climate change.
The French President said, “First, no country should have to choose between fighting poverty and protecting the planet. Second, each country must follow its own path because there is no single model. Third, we need to take on a public funding shock. And fourth, we need more from the private sector to mobilize a lot of money.”
During the summit, the United States Treasury Secretary, Janet Yellen, noted the importance of regional development banks in addressing development finance challenges and reducing vulnerabilities in developing countries.
She said, “We are seeing important innovations begin to take shape across the African Development Bank, the Asian Development Bank, the Islamic Development Bank, and others.”
Yellen further called for the continued partnership between the World Bank and those regional development banks, while also stating the need for reforms at the global bank.
The World Bank President, Ajay Banga, also acknowledged the role of regional development banks at the summit and pledged a closer partnership with the AfDB.
Banga said, “My first visit as a nominee was to Côte d’Ivoire to meet with Akin (Akinwumi Adesina). So, I think in many ways we have to work in partnership.”
