With the World Bank-International Monetary Fund annual meetings this week occurring just after the U.N. General Assembly, international development advocates have been pressing for a dramatic increase in private-sector investment to improve the quality of life in emerging and developing nations.
The U.N. meetings focused on the “sustainable development goals” (SDGs), with proponents urging bold steps to raise $2.5 trillion a year in new investment to fight poverty, protect the environment and improve health. The World Bank and IMF meetings are focused on the stability of the financial system and the economic outlook, as well as economic development and foreign aid.
What both constituencies need to realize is that a comprehensive development strategy — as proposed in the SDGs — and global financial stability are inextricably linked.
U.N. Secretary-General Antonio Guterres correctly identified the global financial system as the best source for the $2.5 trillion, presenting a strategy to “reshape” global finance to ensure the goals are supported. While he provided few details, Guterres made it clear that more investment from large, private financial institutions in infrastructure, health care and similar projects is essential. Development advocates are now bringing that message to World Bank and IMF officials this week.
There’s no question that the financial system can do a lot more to cover the tab. At the end of 2016, the world’s five largest banks alone held more than $14 trillion in assets. And every year, banks package and sell $13 trillion in new debt and equity securities to institutional investors. By contrast, investment in sustainable development projects from all sources was only $1.4 trillion, according to a World Economic…