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CGD Policy Blogs

 

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What Are the Development Outcomes of Development Finance?

What impact do development finance institutions (DFIs) like the IFC have on actual development? Today, George Yang and I release a paper that tries to take a sectoral approach to impact: does an IFC electricity investment lead to more power production per capita in a country, or financing provided to local banks lead to a larger proportion of people with a bank account?

A pile of money, giftwrapped. Adobe Stock.

Development Finance Institutions Should Be Instruments of Public Policy, Not Private Gain

The World Bank Group has some very clear (and very good) guidelines about what makes for a successful public-private partnership where governments contract service provision like energy supply or education from private firms. Sadly, the bank has been ignoring that rule recently. And that is a sign of a broader problem in donor-backed financing of public-private partnership deals.

Philippe Le Houérou at the WEF. Photo by World Economic Forum / Jakob Polacsek

Aid Transparency and Subsidies to Private Companies: A First Step, But a Long Road Ahead

Today the IFC announced a step forward in its transparency around the use of aid resources to finance private companies. That’s right and proper: When scarce aid, and scarce tax resources, are used to support private firms, citizens of donor countries and recipient countries alike have a right to know where the money is going to and how generous the terms. A number of us at CGD had been calling for greater transparency around subsidies to the private sector from the IFC and other development finance institutions, so this is a welcome first step. However, a few aspects have might be cause for concern.

Chart showing IFC project ratings

Is the New Model IFC a Good Deal for IDA Countries?

For much of the last decade, the World Bank’s private sector arm, the International Finance Corporation (IFC), has delivered a share of its profits as grants to the World Bank Group’s soft lending arm for governments, the International Development Association (IDA). In the last couple of years that pattern has reversed.

Interior view of World Bank HQ

Reforming World Bank Aid to the Private Sector for Greater Competition and Transparency

Chairwoman of the US House Committee on Financial Services Maxine Waters' recent intervention provides an opportunity for the Bank Group to rethink the Private Sector Window to better align with the International Finance Corporation’s 3.0 reform process, which was designed to increase the Corporation’s development impact, move toward making markets, and improve standards. At the same time, reform could allow the PSW to live up to the Multilateral Development Bank Principles to support sustainable private sector operations.

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A Review of the Mid-Term Review of the IDA Private Sector Window

A few weeks ago, the World Bank’s soft-lending arm IDA held the mid-term review of its 18th round of funding. As background for the meeting, the World Bank produced a status update of the new IDA Private Sector Window (PSW) that I have blogged about before. The update provides valuable insight into how the $2.5 billion of PSW funding is being used at the halfway mark of its spending cycle but leaves some big unknowns.

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Don’t Let Development Finance Institutions Water Down Principles on Subsidizing Private Companies

In my last blog post on the IDA Private Sector Window, I noted the strong principles on subsidies to the private sector that were agreed by the heads of the multilateral development banks (MDBs) in 2012 as part of the Multilateral Development Bank Principles to Support Sustainable Private Sector Operations. Those principles can be summarized as “start with the public policy problem, use open offers or competitive approaches, maximize transparency.” It is interesting to compare the MDB principles to the principles which later emerged from the DFI Working Group on Blended Concessional Finance for Private Sector Projects.

 
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Redesigning the IDA Private Sector Window for Impact: Some Principles and Potential Practices

I have previously suggested that the current design of the $2.5 billion World Bank/IDA Private Sector Window (PSW) seemed an inefficient use of scarce aid resources, didn’t follow the World Bank’s own guidance on disclosure and design of subsidies to the private sector, and is noncompetitive, nontransparent, and unstructured. In this blog post, I offer some ideas on how the World Bank Group could reconstruct the PSW towards real development impact in the next round of IDA funding, to be negotiated in 2019.

Please, Can You Help Me Understand IDA's New Private Sector Window?

The World Bank’s soft lending arm for poorer countries, IDA, is busy rolling out a new $2.5 billion Private Sector Window. (See last year’s outline proposal for reference.) Bigger private sectors in IDA countries would be hugely welcome, so there is much to like in the broad thrust of the proposal, as suggested by Nancy Lee. But I’m left a little baffled by the details, and would love some reactions as to what I’m missing.

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