Next week in Zambia, donors to the World Bank’s financing window for low-income countries, the International Development Association (IDA), meet to discuss IDA’s future. This “mid-term review” is both a stocktaking session and a teeing up of the next round of fundraising for the world’s largest concessional lending fund. Formal negotiations will commence next year, but the meetings in Zambia set the scene for those negotiations.
CGD Policy Blogs
What would it look like today if major multilateral finance institutions like the World Bank had never adopted the climate agenda as a binding constraint on their operations? Unfortunately, we have a real-world approximation of that hypothetical in the form of Chinese development finance. At least, that’s a conclusion I draw from an important new report from World Resources Institute (WRI) and Boston University, Moving the Green Belt and Road Initiative: From Words to Actions.
In most developing countries, China's role as a creditor is modest—but in eight of the most debt vulnerable countries, Chinese lending is significant and growing fast.
The IDFC represents a unique mix of bilateral agencies, national development banks, and regional development banks. As such, it holds promise for bringing new and productive collaborations to the SDG agenda that extend well beyond the work of the major multilateral development institutions. In a new brief, our efforts to map the scale and scope of IDFC members’ development financing through a membership survey and public databases provide some interesting takeaways:
The Trump administration is worried about the role of Chinese finance in spreading Marxism around the developing world. But it’s Chico Marx, not Karl, that they should be focused on.
The International Finance Corporation wants to increase support for both private sector-led development and fragile states. But how viable are these goals?
In a new CGD paper, we assess the likelihood of debt problems in the 68 countries we identify as potential BRI borrowers. The big takeaway: BRI is unlikely to cause a systemic debt problem, yet the initiative will likely run into instances of debt problems among select participating countries—requiring better standards and improved debt practices from China.
In 1944, the United States created a blueprint for economic statecraft that relied heavily on a new class of multilateral institutions to pursue US interests in the world. The blueprint itself is now under serious duress in the “America First” strategy of international engagement of the Trump administration.
Is the New Budget Deal Good for Foreign Aid? Maybe. Is it Good for Developing Countries? Probably Not.
Foreign aid advocates might be tempted to take heart from the budget deal just struck on Capitol Hill. But the overall shift in the US fiscal position, driven primarily by last year's tax cuts and furthered by this spending agreement, suggests that developing countries will be net losers by orders of magnitude that swamp the entire US foreign assistance budget.
As the World Bank makes a case to its shareholders for a capital increase this year, they are grappling with an uncomfortable truth: one of their biggest borrowers, China, happens to hold the world’s largest foreign exchange reserves, is one of the largest recipients of foreign direct investment, enjoys some of the best borrowing terms of any sovereign borrower, and is itself the world’s largest sovereign lender.