More Critical Than Ever: Strengthening Growth and Resilience through the Multilateral Development Banks

The MDB response has been broad-based and under normal circumstances the actual changes could even be considered as dramatic compared to prior years of much talk and little action. MDB balance sheet headroom has been expanded while preserving credit ratings, mostly through internal policy changes on risk management. Hybrid capital instruments, portfolio guarantees, co-financing and guarantee platforms and new approaches to private capital mobilization are enabling MDBs to reach record levels. MDBs are also working more together: they routinely publish joint reports on climate finance, private mobilization, reform roadmaps, and digital platforms. They have signed mutual reliance agreements for procurement and safeguards that have been much appreciated by clients. A variable geometry of MDBs have made joint commitments on climate finance, dialogue with credit rating agencies, and sector specific initiatives such as M300 and Water Forward. Individual organizations have retooled knowledge and advisory functions, shortened internal lending processes (from 19 months to 9 months for some projects), and stepped-up partnerships in support of transformative change.