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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?
Public policy on financial crises in emerging markets has implicitly been grounded in economic theory calling for lender-of-last-resort intervention when the country is solvent, and on theory recognizing that reputational damage is the quasi-collateral enabling lending to sovereigns with no physical collateral. The call for Private Sector Involvement — PSI — in the financing of crisis resolution has appropriately arisen from the desire for fairness as well as for successful outcomes. This paper identifies an array of PSI modalities and argues that in each crisis case the most voluntary type consistent with the circumstances should be chosen, to speed return to market access.
It has operations in more than 30 countries worth around $9 billion. And now the European Bank for Reconstruction and Development is searching for its next leader. Current president Sir Suma Chakrabarti is seeking a second four-year term as EBRD president, and he faces the challenge of Marek Belka, a former Prime Minister and Finance Minister of Poland and currently president of the country’s National Bank. Recently both candidates recorded interviews with me, which we have edited together into this edition of the CGD Podcast.
Ghana’s rapid economic growth and the recent GDP rebasing exercise put Ghana suddenly above the income limit for IDA eligibility. This paper considers the implications of the country’s new middle-income status.
This paper examines courses of action that could help the bank could adapt to shifting development priorities. It investigates how country eligibility standards might evolve and how the bank might start to break away from its traditional “loans to countries” model.