Multilateral Development Banks deepen cooperation to achieve results as a system | News

The leaders of ten multilateral development banks (MDBs) today announced joint steps to work more effectively as a system and increase the impact and scale of their work to address pressing development challenges.

In a Point of view noteleaders outlined key deliverables for joint and coordinated action in 2024 and beyond, building on progress since their Marrakesh Declaration in 2023, as their institutions work to accelerate progress towards the Sustainable Development Goals (SDGs) and customers better support in tackling regional problems. and global challenges.

The actions, released at the end of a retreat organized by the Inter-American Development Bank (IDB), which holds the rotating chair of the MDB Heads Group, represent strengthened cooperation among MDBs. The note will also serve as a valuable contribution to the upcoming G20 roadmap to develop MDBs into a “better, bigger and more effective” system and in other fora.

MDB heads have committed to concrete and actionable results in five key areas:

1. Scaling up MDB financing capacity. MDBs expect to generate additional credit space in the range of $300 to $400 billion over the next decade, with the support of shareholders and partners. Actions include:
– Offering a diverse range of innovative financial instruments to shareholders, development partners and capital markets, including hybrid capital and risk transfer instruments, and promoting the channeling of the IMF’s Special Drawing Rights (SDRs) through MDBs.
– Providing more clarity on callable capital, allowing rating agencies to better assess the value of callable capital.
– Continue to implement and report on the G20 Capital Adequacy Framework (CAF) Review recommendations and related reforms.

2. Stimulating joint action against climate change. MDBs are increasing their shared commitment to climate. Actions include:
– Delivering the first common approach to measuring climate outcomes in adaptation and mitigation.
– Continue to align activities with the goals of the Paris Agreement and jointly report on climate finance, and participate in the UN-led process towards a new collective climate finance target.
– Continue to support and improve early warning systems for natural disasters.

3. Strengthening cooperation and co-financing at country level. MDBs are involved in discussions and supporting country-owned and run platforms to make it easier for countries to work with the banks. Actions include:
– Reviewing proposals on country-led and country-managed platforms, towards a common understanding and next steps, including for some MDBs to implement platforms.
– Continue to harmonize purchasing practices, including by relying on each other’s purchasing policies to reduce transaction costs and increase efficiency and sustainability.
– Accelerating the co-financing of public sector projects through the recently launched Collaborative Co-Financing Portal.

4. Catalyzing private sector mobilization. MDBs aim to scale up private sector financing for development goals, including through the pursuit of innovative approaches and financial instruments. Actions include:
– Scaling up local currency lending and foreign exchange hedging solutions to stimulate private investment. MDBs are working to identify scalable approaches.
– Expanding the type and breakdown of statistics that MDBs and Development Finance Institutions (DFIs) release through the Global Emerging Markets Risk Database (GEMs) Consortium, to support investors in better assessing investment risks and opportunities.

5. Improving the effectiveness and impact of development. MDBs agreed to increase emphasis on the impact of their work. Actions include:
– Increasing cooperation on joint impact assessments, including by sharing approaches for monitoring and assessing impact, and pursuing harmonization initiatives, where useful.
– Taking stock of the key performance indicators (KPIs) on nature and biodiversity that are currently in use and investigating the feasibility of aligning some indicators in the run-up to COP30 in 2025.

For more details see the Point of view note.