A tool developed by the Center for Global Development (CGD) has revealed that while the World Bank and six other Multilateral Development Banks (MDBs) have made significant strides in incorporating global challenges such as climate change into their agendas, there is still considerable ground to cover in implementing other necessary reforms.
According to Reuters News, the tracker evaluates the progress of seven MDBs across 28 specific items categorized under five areas: optimizing capital utilization, increasing capital availability, incorporating global challenges into their mandates, facilitating private finance mobilization, and enhancing the efficiency of country engagements.
The report Top of Form
found highly uneven results among the institutions and said no single MDB excelled in all reform categories.
- “People should be encouraged with progress on expanding the mandates, but they should not be satisfied with progress on the other categories,” said Nancy Lee, a former senior U.S. Treasury official and lead researcher for CGD’s MDB Reform Tracker.
- “The glass is more empty than full.”
Lee said she was worried that without real progress and actions by all the major MDBs, inertia could set in and momentum for reforms could subside.
The United States, the World Bank’s biggest shareholder and other countries, are pushing the bank and its sister development banks to focus on climate change alongside poverty reduction and development, and to take on more risk to expand their lending.
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Developing and emerging economies need $2.4 trillion per year
Some experts argue that developing and emerging economies need $2.4 trillion per year to meet global climate challenges – a number that far exceeds the amount of financing now available.
A number of major reports commissioned by the Group of twenty (G20) major economies and other institutions have laid out specific reforms for the MDBs to implement.
The report said the banks had largely recognized the urgency and importance of addressing climate change within the financial sector, and all seven MDBs assessed had either included global challenges in their mandates or were in the process of doing so.
But for most of the 28 items on the reform agenda, including work on issuing hybrid capital and enacting capital increases, there was still a long way to go, it said.
It said the World Bank Group was at some stage of pursuing 96% of the agenda items, while the European Bank for Reconstruction and Development was close behind with 93%. The Asian Development Bank and the Inter-American Development Group had taken action on half the agenda, it said.
What you should know
An MDB is a financial institution established by multiple member countries and falls under the international law. The owners of multilateral development banks are a national governments and other international institutions and organizations.
Examples of multilateral development banks are: World Bank (WB), International Monetary Fund (IMF), International Finance Corporation (IFC) and among others.
The purpose of MDBs is to facilitate financing and provide advisory services for developing countries. Multilateral development banks are also referred to as an international financial institution (IFI).
