New Delhi: The International Monetary Fund (IMF) and the World Bank (WB) should not drift away from their core competencies, as their decisions impact the global monetary systems, finance minister Nirmala Sitharaman warned on Wednesday.

Speaking at a discussion on “Bretton Woods Institutions at 80: Priorities for the Next Decade,” held on the sidelines of the 2024 World Bank and IMF annual meeting in Washington, Sitharaman emphasized that multilateral institutions like the IMF should avoid venturing into areas beyond their core expertise.

“Your core business is what you have to focus on. I would think that is the most important thing because if you don’t address it, the global monetary systems are going to be adversely impacted,” she said.

Sitharaman stressed the need for careful evaluation of financial assistance, noting that resources are finite and long-term, cautioning that concessional finance and donor support should not become indefinite, as it could undermine the intended short-term objectives.

“The evaluation exercise, which is being carried on in the World Bank, (and the IMF) should be more transparent, I would think, and consultative, and it should reflect the interests of all countries who the Bretton Woods institutions are helping,” Sitharaman added.

Sitharaman called for a shift in thinking in the Bretton Woods institutions to meet the needs of the next decade.

“I think we need to have a road map for concrete reform-based steps that have to be initiated because we’ve started doing that during India’s presidency of (G20), after a lot of introspection, inclusion, and so on,” she added.

A key focus of the 2023 Indian G20 presidency was on reforming multilateral development banks (MDBs) to improve their contribution to global development financing.

An International Expert Group (IEG) headed by N.K. Singh, an economist and former bureaucrat, along with Lawrence Summers, former US treasury secretary, released a two-part report on strengthening MDBs which suggested various reforms

Among other things, the first part of the Singh-Summers report suggested an increase in MDBs’ annual spending by $3 trillion by 2030, including $1.8 trillion for additional climate action and $1.2 trillion for achieving other sustainable development goals (SDGs).

The second part of the report stated the need for MDBs to mobilize $240 billion in private capital by shifting from risk avoidance to informed risk-taking, apart from introducing new lending instruments like pooled portfolio guarantees and hybrid capital.

Following the release of the report in 2023, in a joint statement MDBs, including the World Bank, agreed on the need for transformative changes in the operating models and financing capabilities as suggested by the expert committee headed by Singh and Summers.

“We talked about tripling the size of the lending of the institutions by 2030. We talked about dramatic changes in the speed with which they came to conclusions and delivered resources. We spoke about different levels of cooperation with and engagement with the private sector that were qualitatively and not merely quantitatively different,” Summers, also part of the discussions, said.

“The (Bretton Woods) institutions have to say things and do things that capture the imagination of the world. There have been moments when they did that when they sketched visions and put many, many billions of dollars behind the transition,” he added.