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Multilateral Development Banks (MDBs)


Why is it in the news?

  • The G20 expert panel, tasked with strengthening Multilateral Development Banks (MDBs) like the World Bank and the Asian Development Bank, has put forth a crucial proposal.

More about the news

Shift in the approach

  • They recommend a fundamental shift in the approach of these institutions, moving away from financing individual projects and instead prioritizing comprehensive programs that align with sectoral goals and long-term transformation plans outlined by national governments.
  • This strategic shift aims to enhance the effectiveness and impact of MDB operations by closely aligning them with a nation’s highest-priority sustainable development goals (SDGs).
  • This approach emphasizes the commitment of country leadership and the level of national investment as key determinants in shaping MDB initiatives.

 

Multilateral Development Banks (MDBs)

路聽聽聽聽聽聽 Multilateral Development Banks (MDBs) are institutions comprising multiple developed and developing countries.

路聽聽聽聽聽聽 They provide financing and technical assistance for development projects across various sectors.

路聽聽聽聽聽聽 Typically, developed countries contribute to the lending pool, while developing countries primarily borrow from these institutions to fund their projects.

Experts advocating for reforms within MDBs

  • Experts argue that global challenges, such as the climate crisis, require coordinated efforts on a global scale, especially in emerging markets and developing economies (EMDEs).
  • Reformed MDBs can equip stakeholders to address these global challenges more effectively.
  • Reforms aim to align MDBs with the developmental priorities of individual nations and increase private sector engagement.
  • Greater coordination among multiple stakeholders, including national governments, is crucial to mitigate coordination failures and address global challenges.

Traditional way of Multilateral Development Banks lending to countries such as India

  • MDBs have played a significant role in financing infrastructure projects in India with longer gestation periods.

 

Multilateral Development Bank (MDB)Total Commitment in IndiaMajor Allocations in Sectors
World Bank$97.6 billion– Public Administration: $18.7 billion
– Agriculture: $14.8 billion
– Transport: $10.6 billion
Asian Development Bank (ADB)$59.7 billion– Transport: $20.2 billion
– Energy: $15 billion
– Urban Infrastructure: $6.7 billion
Asian Infrastructure Investment Bank (AIIB)$9.9 billion– Transport: $4.2 billion
– Energy: $1.4 billion
– Economic Resilience: $1.25 billion
European Investment Bank (EIB)Euro 4.5 billion– Transport: Euro 2.45 billion
– Energy: Euro 1.5 billion

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