The Inter-American Development Bank yesterday said leaders of 10 multilateral development banks committed to take action in five critical areas, including additional lending headroom totalling $300-400 billion over the next decade.
The effort comes amid growing calls for these institutions to boost financing under favourable conditions to developing countries, which face greater challenges in climate transition and are more affected by the environment of higher global interest rates.
“Together, we will be able to achieve more, with greater impact and on a larger scale,” said IDB president Ilan Goldfajn.
Following a retreat held in Washington at the IDB headquarters, on the sidelines of the International Monetary Fund and World Bank spring meetings, the MDBs said the agreed plan involves “joint steps to work more effectively as a system,” as reported by Reuters on Wednesday.
The group includes institutions such as the World Bank Group, the New Development Bank, the Asian Infrastructure Investment Bank, the European Investment Bank and the African Development Bank.
The IDB said in a statement that the increased financing capacity will be supported by the offer of innovative financial instruments and by promoting the channelling of the IMF’s Special Drawing Rights (SDRs) through MDBs.
The IDB also foresaw actions “providing more clarity on callable capital, which would help rating agencies better assess the value of callable capital.”
The MDBs also committed to boosting action on climate change, envisioning the delivery of a common approach to measuring climate results on adaptation and mitigation, and reporting climate financing jointly.
The other pillars of work agreed upon yesterday include strengthening country-level collaboration and co-financing, catalysing private-sector mobilisation, and enhancing development effectiveness and impact.
The steering committee for both International Monetary Fund and the World Bank yesterday emphasised the need for broader accountability as the institutions implemented reforms to help countries grapple with climate change and other shocks.
“We must hold ourselves accountable more broadly as we become a better and bigger bank,” said Mohammed bin Hadi Al Husseini, the UAE minister of state for finance, who heads the joint Development Committee this year.
Al Husseini issued a chair’s statement, rather than a communiqué, amid disagreements over wars in the Middle East and Ukraine, but referenced economic risks posed by the conflicts. The statement came as this week’s meetings of the IMF and World Bank drew to a close.
Governors of the institutions urged the World Bank to continue to bolster global and regional partnerships, and asked its management to push ahead with country engagement reforms and enhanced country diagnostics.
They also encouraged further collaboration between the World Bank and IMF to help countries mobilise more revenues at home, and on issues such as climate change and pandemic preparedness, as well as debt sustainability.