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Reform of the multilateral development banks: how FfD4 can support it

Walle, Yabibal
Staff - Other (2025)

in: Stephan Klingebiel / Jorge A. Pérez-Pineda / Kathrin Berensmann, Financing for development: From Monterrey to Seville, Bonn: German Institute of Development and Sustainability (IDOS), 79-83

Multilateral development banks (MDBs) have been key actors in financing sustainable development for the past eight decades. Recent reform efforts, mainly led by the G20 countries, have expanded MDBs’ mandates to include addressing global challenges such as climate change and  boosting their financing capacity while also calling on them to work as a system. The Fourth International Conference on Financing for Development (FfD4) – being a more inclusive and universally representative UN-led process than the G20 – should endorse and advocate for the  acceleration of ongoing MDB reforms. In particular, the FfD4 Outcome document should emphasise that, in light of the expanded mandates of the MDBs, failure to achieve a comparable augmentation of their financial capabilities could result in an undesirable but inevitable redirection of  resources, from poverty alleviation and shared prosperity to predominantly addressing global challenges such as climate change. In this regard, FfD4 can play a pivotal role in advancing reforms in two key areas for boosting MDB capital that have seen limited progress thus far: leveraging callable capital and utilising special drawing rights (SDRs) to invest in hybrid capital vehicles designed by MDBs.

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