Multilateral Development Banks (MDBs)

By Amigos IAS

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)

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

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

·       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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