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Multilateral development banks still need work on implementing reforms, group says

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11th April 2024

By: Reuters

  

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The World Bank and six other multilateral banks have made good progress in integrating global challenges like climate change into their agendas, but most have miles to go in implementing other needed reforms, a tool tracking the reforms shows.

The tracker, developed last year by the Center for Global Development (CGD), assessed progress at seven multilateral development banks (MDBs) on 28 specific items under five categories: using capital more efficiently, expanding capital, adding global challenges to their mandates, mobilizing private finance and making country engagements more efficient.

It found highly uneven results among the institutions and said no single MDB excelled in all reform categories.

"People should be encouraged with progress on expanding the mandates, but they should not be satisfied with progress on the other categories," said Nancy Lee, a former senior US Treasury official and lead researcher for CGD's MDB Reform Tracker.

"The glass is more empty than full."

Lee said she worried that without real progress and actions by all the major MDBs inertia could set in and momentum for reforms could subside.

The United States, the World Bank's biggest shareholder, and other countries are pushing the bank and its sister development banks to focus on climate change alongside poverty reduction and development, and to take on more risk to expand their lending.

Some experts argue that developing and emerging economies need $2.4-trillion a year to meet global climate challenges - a number that far exceeds the amount of financing now available.

A number of major reports commissioned by the Group of Twenty (G20) major economies and other institutions have laid out specific reforms for the MDBs to implement.

CGD said the banks had largely recognized the urgency and importance of addressing climate change within the financial sector, and all seven MDBs assessed had either included global challenges in their mandates or were in the process of doing so.

But for most of the 28 items on the reform agenda, including work on issuing hybrid capital and enacting capital increases, there was still a long way to go, it said.

It said the World Bank Group was at some stage of pursuing 96% of the agenda items, while the European Bank for Reconstruction and Development was close behind with 93%. The Asian Development Bank and the Inter-American Development Group had taken action on half the agenda, it said.

Edited by Reuters

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