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The overlapping mandates of existing IFIs and the emergence of new development finance institutions raises the question of whether the current development finance system is effectively working together to target scarce global aid resources towards areas of greatest impact. Nations face shared problems–such as climate change, recovery from the COVID-19 crisis and the threat of future pandemics, and unregulated cross-border movements of people–that can only be addressed through international cooperation. Economic prosperity has led to an increasing number of middle-income countries, bringing with it a need to examine the role of development finance institutions in relatively wealthier economies. Rising debt levels in vulnerable countries is also a growing concern in the development community, leading to a greater need for coordination on norms and standards among development lenders.
With aid representing a declining share of development finance, CGD is asking what institutional changes are needed within the multilateral development banks and other international financial institutions to reflect new realities and rise to the challenge of a resilient and sustainable recovery that resets the world on a path to achieving the SDGs? How should bilateral donors be most effective in the more complex development finance system? And how can those changes be made most effectively?
*This post is co-authored by Kaysie Brown
The World Bank's Operations Evaluation Division has just released a lengthy report documenting a rise in the world's "fragile states" and drawing a direct connection between state weakness and transnational threats. As Karen DeYoung reports in today's Washington Post,
“Fragile" countries, whose deepening poverty puts them at risk from terrorism, armed conflict and epidemic disease, have jumped to 26 from 17 since the report was last issued in 2000.
Increased attention to development and stability in fragile states by both the World Bank and the U.S. Government signals the importance of and challenges associated with providing assistance in these critical yet vulnerable states. CGD recently launched the Engaging Fragile States initiative to focus on key unanswered questions for the development community working in these tough environments. A quick read of the Bank report raises a number of issues that our work is focusing on:
Critics allege that the World Bank is deeply flawed. Yet the world needs a strong World Bank to help manage development and the related global challenges of the 21st century. Do the Bank's shortcomings put its future at risk? If so, can the Bank be rescued? Rescuing the World Bank, a new book that includes a CGD working group report and selected essays edited by CGD president Nancy Birdsall, offers timely perspectives on challenges that are crucial to the Bank’s future success.
This is a joint posting with David Wheeler
The International Finance Corporation, the private sector investment arm of the World Bank, is set to have yet another banner year with profits in the range of $2 billion. As the IFC's equity stakes in services, telecommunications and particularly in oil and gas have grown, so have its profits. In FY07, IFC invested more than $8 billion of its own money and mobilized nearly $4 billion more. In Sub-Saharan Africa, it invested about $1.4 billion, doubling its investments from the previous year. In FY08, these numbers look to be even larger. If the IFC continues on its current path, in five years its portfolio will be larger than that of the World Bank itself.
This post originally appeared on the Huffington Post
The current economic crisis is forcing HIV/AIDS donors to do more with less. Taking on gender inequality in more than a token way to improve efficiency and effectiveness is a no brainer. The current U.S. administration has made women and girls a high priority so PEPFAR has all the political backing it needs, and multi-lateral donors like the Global Fund and the World Bank also have full support from their boards of directors. The powerful combination of budget squeeze and political commitment creates an opportunity for three of the largest HIV/AIDS donors to become the lead “gender bender” in global development; that is, to support development programs that transform the lives of women and girls, and thus the societies in which they live.
This post first appeared on the Peterson Institute's Real Time Economic Issues Watch.
With the United States throwing its support behind Christine Lagarde for the post of managing director of the International Monetary Fund (IMF), it seems that it is all over, except for the shouting (or rather the whim of the French magistrate investigating her role in the Bernard Tapie affair). This result is unfortunate in one respect. Any decision on the Lagarde appointment should have been deferred until she had been legally acquitted in France. Especially, in the aftermath of the Dominique Strauss-Kahn affair, it was imperative that the new candidate be, like Caesar’s wife, beyond reproach. So, we could still have a situation (admittedly a low probability one) where the world decides to appoint Ms. Lagarde while there is an ongoing investigation against her in her own country. Nothing would have been lost by delaying the appointment by a few weeks.
During a House Financial Services subcommittee hearing on the global financial crisis and Nigeria’s financial reforms, CGD vice president for programs and senior fellow Todd Moss said Nigeria’s economic and political stability are inextricably linked to each other and to U.S. national interests. He urged members to support the African Development Bank and the World Bank and proposed a new idea: Nigeria should consider using oil revenues to finance cash transfers to citizens in the Niger Delta.