The emphasis of international financial institutions (IFIs) has been gradually shifting from direct financing to policy support of developing countries. Their role in financing declined further to 8 percent of net ODA, whereas their leverage in achieving collective action on development remains strong, including in combating climate change.
All IFIs have adapted their strategies to the rapidly changing environment by focusing on the specific needs of countries. IFIs also put more emphasis on providing knowledge and learning services, and promoting global and regional public goods.
Strategic shifts by MDBs
Inclusive and Sustainable Globalization
Knowledge and Learning
Regional and Global Public Goods
IMF
Scaled-up inflows to LICs Economic Recovery Assistance program Emergency post-conflict Assistance
Modernizing surveillance Multilateral and regional consultations Assessing vulnerabilities to capital flows
Financial Stability
World Bank Group
Africa Fragile States Middle Income Countries Scaling-up aid delivery Private sector development
Provide World Class Knowledge Knowledge sharing and learning between clients Governance and anti-corruption
Climate change Health Trade International financial architecture
African Development Bank
Infrastructure Private Sector Development Middle income countries Post-conflict and post-crisis countries
Governance Economic and Financial Reforms African experiences and perspectives
Regional integration Environment and Climate Change
Asian Development Bank
Infrastructure Financial Development
Knowledge Management
Regional integration Regional financial markets
European Bank for Reconstruction and Development
Early and intermediate transition countries, Russia
Life in transition Survey
Sustainable Energy Initiative Energy Efficiency and Climate Change team
Inter-American Development Bank
Opportunities for the Majority initiative Infrastructure Investment Fund Disaster Prevention Fund Water and Sanitation Initiative
New evaluability instrument
Sustainable Energy and Climate Change initiative
Operational trends and results
MDBs’ gross disbursements amounted to $49 billion in 2007. Of this, $37 billion was in non-concessional resources, up from $25 billion in 2005. Demand for new non-concessional sovereign loans remains generally flat.
Africa now receives 45 percent of total concessional flows, up from 37 percent in 2000.
IDA15 will allow for $41.6 billion of new commitments between FY2009-11.
Trust funds are a rapidly growing business segment for the MDBs.
MDBs’ non-sovereign flows (lending and equity investments) have grown sharply in recent years, from $3.1 billion in 2000 to $13.3 billion in 2007. The IFC accounts for half of this, while the rest is accounted for by the regional development banks, mainly EBRD.
Knowledge services have been steadily expanding and are increasingly done jointly with partner countries or with other donors. The IMF is adapting its macroeconomic advice to the changing needs of countries, making use of cross-country knowledge. It is using its recently established Policy Support Instrument to provide policy support for low-income countries that do not need financial assistance from the IMF but want its advice, monitoring, and endorsement of their economic policies.
In 2006, progress in harmonization and alignment was being made in only half the countries surveyed. With harmonization efforts being made at the country level, MDBs have pursued decentralization of their operations to the field.
In line with their changing strategies, MDBs have adjusted the sectoral composition of new commitments: infrastructure has re-emerged as a major sector.
Results orientation of the Multilateral Development Banks
The Common Performance Assessment System (COMPAS) report provides a common source of information on the results orientation of the MDBs’ internal practices and operational relationships with country and development partners. The table below highlights some of the findings from the 2007 COMPAS report.
MDB
Results
African Development Bank
12% increase in number of country strategies showing satisfactory or better results (independent ex-post evaluation)
Asian Development Bank
12% increase in proportion of projects with satisfactory or better ratings for development outcomes
EBRD
An increase in disbursement ratio from 55 to 60 %.
IDB
13% increase in number of countries assisted in strengthening results management capacity
World Bank
27% increase in share of projects with baseline data, monitoring indicators and target outcomes
41% increase in share of projects with satisfactory or better rating in independent ex-post evaluation
How the IFIs Promote Environmental Sustainability
All IFIs have mainstreamed environmental issues into their country work and are now developing climate change strategies and policies to help clients with mitigation and adaptation.
World Bank investment lending for Environment and Natural Resources Management (ENRM) between 2002 and 2007 amounted to $10.2 billion. This constituted about 10.4 percent of total Bank lending. Development policy lending for environmental policy and institutional reforms rose sharply from $59 million in 2004 to $264 million in 2006.
There has been significant World Bank progress in development of carbon markets: the Umbrella Carbon Facility was launched in August 2006 and is now fully funded with total capital of $1 billion. Two new Carbon Facilities—the Carbon Partnership Facility (CPF) and a Forest Carbon Partnership Facility (FCPF)—were launched in December 2007 to scale up carbon finance.
In the past 10 years, ADB has supported 113 investment projects with environmental objectives or elements with a cumulative value of $8.4 billion, averaging $720 million a year and representing about 12 percent of ADB’s overall annual investments. These investments reached a high of 21 percent of the total in 2006.
EBRD’s cumulative environmental investments were $3.8 billion between 2002 and 2006, including projects dealing with municipal environmental infrastructure, energy efficiency, and clean-up operations.
Over the same period, the IDB approved a total of 79 environmental loans, investing $2 billion. The focus was primarily on water and sanitation (88 percent). Environmental lending amounted to about 10 percent of total Bank lending.
.gif "Fig 5.2 - WB Knowledge Service Inputs - Large")
.gif "Fig 5.7 - Active WB Environment Portfolio - Large")
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