THE leaders of 10 multilateral development banks (MDBs) have announced joint steps to work more effectively as a system and increase the impact and scale of their work to tackle urgent development challenges.

The leaders outlined key deliverables for joint and coordinated action in 2024 and beyond, building on the progress since their Marrakesh statement in 2023, as their institutions work to accelerate progress toward the Sustainable Development Goals (SDGs) and to better support clients in addressing regional and global challenges.

Published at the conclusion of a retreat hosted by the Inter-American Development Bank (IDB), which holds the rotating chair of the MDB heads group recently, the actions represent the strengthened collaboration amongst MDBs. 

The action will also serve as a valuable contribution for the forthcoming G20 Roadmap to evolve MDBs into a “better, bigger and more effective” system and in other fora.

The MDB heads committed to concrete and actionable deliverables in critical areas including generate additional lending headroom in the order of $300-400 billion over the next decade, with the support of shareholders and partners. 

This will involves offering a diverse set of innovative financial instruments to shareholders, development partners and capital markets, including hybrid-capital and risk-transfer instruments, and promoting the channeling of the IMF's Special Drawing Rights (SDRs) through MDBs.  

The lending headroom will also providing more clarity on callable capital which would help rating agencies better assess the value of callable capital, while continuing to implement and report on the G20 Capital Adequacy Framework (CAF) Review recommendations and related reforms.  

They also agreed on delivering the first common approach to measuring climate results on adaptation and mitigation and align operations to the goals of the Paris Agreement and to jointly report on climate financing, as well as engaging in the UN-led process towards a new collective goal on climate finance.

Most importantly, the leaders also agreed to enhance supports and improve early-warning systems for natural disasters.

Through strengthening country-level collaboration and co-financing, MDBs say will continue with discussions and supporting country-owned and country-led platforms to make it easier for countries to work with the banks. 

This will include ssessing proposals on country-led and country-owned platforms, towards a common understanding and next steps, including for some MDBs to implement platforms, harmonizing procurement practices, including by relying on each other’s procurement policies to reduce transaction costs and increase efficiency and sustainability as well as accelerating co-financing of public-sector projects through the newly launched Collaborative Co-Financing Portal. 

The fourth step will involve catalyzing private-sector mobilization as MDBs are committed to scaling up private-sector financing for development goals, including by pursuing innovative approaches and financial instruments. 

Actions include scaling up local-currency lending and foreign-exchange hedging solutions to boost private investment. 

MDBs are also working to identify scalable approaches and expanding the type and disaggregation of the statistics that MDBs and Development Finance Institutions (DFIs) release through the Global Emerging Markets Risk Database(link is external) (GEMs) Consortium, supporting investors to better assess investment risks and opportunities. 

MDBs also agreed to heighten the focus on the impact of their work through increasing collaboration on joint impact evaluations, including by sharing approaches to monitoring and assessing impact, and pursuing harmonization initiatives, where useful and taking stock of the key performance indicators (KPIs) on nature and biodiversity that are currently in use and explore the feasibility of alignment of some indicators ahead of COP30 in 2025.

The MDBs network was established over 20 years ago to harmonize operational policies and practices for the purpose of enhancing economy, efficiency, effectiveness', and fairness across all financed operations by the MDBs namely, ADB, AfDB, AIIB, BSTDB, CDB, CEB, EBRD, EIB, IADB, IFAD, IsDB, and the World Bank.