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Multilateral development banks

The Monterrey Consensus and the Doha Declaration emphasized the key role that multilateral development banks (MDBs) play in the provision of finance for development. The Addis Agenda reaffirms the contribution of MDBs and other international development banks to sustainable development including in countercyclical lending and providing both concessional and non-concessional stable, long-term development finance.  

MDB lending




















The ability of development banks to fund long-term productive investments makes them well suited to contribute to implementing sustainable development. In 2017, total lending by MDBs—including the World Bank, regional development banks, and other multilateral and intergovernmental agencies—reached $63.0 billion, out of which $22.5 billion was concessional. 

Use of resources and balance sheets, and risk management tools
In line with the Addis Agenda, MDBs have individually and collectively implemented several measures to make optimal use of their resources and balance sheets. The G20 put forth a similar call in their Antalya Summit Leaders’ communiqué in November 2015 and in the March 2017 Communiqué of Finance Ministers and Central Bank Governors. In response, multilateral development banks have undertaken a number of actions. 
They include the merging of concessional windows with ordinary capital or enabling concessional windows to access capital-market resources. The merger of the Asian Development Fund’s and Asian Development Bank’s core balance sheets expands its lending capacity by 50 per cent  while IDA blending of donor contributions with market-issued debt has allowed it to increase its lending capacity.  MDBs have also increasingly focused on their ability to mobilize additional private investment—including, for example, in the adoption of the World Bank Group’s “Maximizing Finance for Development” approach. In 2016, the MDBs directly mobilized $49.9 billion in private co-financing, of which $7.1 billion went to infrastructure.  Yet, only two per cent of this co-financing, or $1 billion was mobilized for low-income and least developed countries where infrastructure gaps tend to be greatest
MDB policies in support of the 2030 Agenda and SDGs
MDBs support their member countries’ efforts to translate the SDGs into meaningful country-level policies, programs, and projects. They do so through financing—directly and by helping to catalyze additional public and private resources— and through policy advice and technical assistance supporting countries to build domestic capacity and to identify priority investments. 
MDBs continued to enhance coordination and collaboration and have agreed on common actions to address critical issues of the 2030 Agenda in areas such as forced displacement, climate finance, infrastructure, private investment, and urbanization. This included the launch of the Global Infrastructure Forum, and the launch of two new facilities to bridge the gap between humanitarian and development assistance by ensuring support to countries hosting large numbers of refugees – the World Bank’s Global Concessional Financing Facility, part of its Global Crisis Response Platform, and the European Investment Bank’s new Resilience Initiative for the EU’s Southern Neighbourhood and Western Balkans. 
To achieve the SDGs, MDBs will need to both achieve greater scale and ensure that social and environmental sustainability considerations are embedded in their lending, in particular for infrastructure investments that will lock-in development paths until 2030 and beyond.
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This could include further aligning internal staff incentives with metrics relevant to achieving the 2030 Agenda for Sustainable Development and the SDGs, rather than focusing them primarily on lending volumes. In the context of optimizing balance sheets, the Addis Agenda also included a call on development banks to use all tools to manage their risks, including through diversification, which warrants further study.
Shareholders of the MDBs should continue to work towards a shared vision of the MDB system. In this context, the G20 Eminent Persons Group on Global Financial Governance will make recommendations to achieve greater coherence of shareholder objectives, policies and compliance standards across international financial institutions, including the MDBs, later this year.
Cooperation among MDBs has increased significantly since the adoption of the Addis Agenda, including through the Global Infrastructure Forum, which was called for in the Addis Agenda, and the Infrastructure Data Initiative, which brings together all the MDBs to jointly set standards for reporting on infrastructure investment. MDBs could further strengthen collaboration in their diagnostic work, support for project preparation and technical assistance. Greater cooperation should serve to support the ultimate objective of strengthening country systems and country capacities.  Cooperation could also be enhanced on financing structures—for example, by the establishment of scalable platforms that can be used to leverage resources across MDBs. Such platforms can support actors that have limited capacities, while allowing the MDBs to pool their resources and expertise. One example of such efforts is SOURCE, a new platform to develop sustainable infrastructure across the MDBs.  Another example is the Global Emerging Markets Risk Database,  a comprehensive database of credit risk information that provides MDBs and development finance institutions with pooled data on credit default rates.
MDB safeguards

The Addis Agenda pays particular attention to development banks’ social and environmental safeguards, particularly in new development banks. In the design of safeguard systems, it calls for consultation with all stakeholders on the basis of established international standards, including on human rights, gender equality and women’s empowerment. Development bank’s safeguards should also aim at being “transparent, effective, efficient and time-sensitive.”