Aligning MDB shareholders' interests: callable capital, preferred creditor status, and sustainable creditor status

This article proposes the release of accumulated callable capital (CC) of borrowing member countries (BMCs) of multilateral development banks (MDBs), the formal recognition of preferred creditor status (PCS), and the establishment of sustainable creditor status (SCS). The three proposals are made because, with COVID-19 behind it, the development community needs to make progress towards Agenda 2030 with a sense of purpose and a sense of urgency. Such progress requires a rational alignment of MDB shareholders’ interests. Occurring under resource constraints, the alignment necessitates trade-offs. The article focuses on MDB shareholders: sovereign states that are either BMCs or non-borrowing member countries. While its proposals can be interpreted as simultaneously advantageous and disadvantageous to each mentioned party, the article should not be read as examining every element necessary for agreement. Similarly, although the importance of mobilizing private-sector resources is recognized, only the need to incentivize participation of institutional investors in offshore sovereign bonds is discussed in a specific context. The proposals contained in this article are meant to encourage stakeholder debate that produces constructive discourse and collective action.