Restoring Purpose, Instilling Inclusivity: Reforming Multilateral Development Banks (mdbs) For Infrastructure Resilience

This Policy Brief proposes operational reforms to restore the MDBs’ infrastructure development mandate. Arbitrary lending criteria have diverted MDB finance away from the regions and countries which need infrastructure finance the most. This Brief focuses on inclusiveness in lending processes to show how MDBs can constrain cascading crises by investing in sustainable infrastructure. This includes addressing an unpredictable climate in emerging markets and developing economies (EMDEs), resource shortfalls, and inadequate planning and construction. Infrastructure is central to about 90% of the Sustainable Development Goals. Social and economic progress, especially in EMDEs, hinges on sustainable and climate-resilient infrastructure. Multilateral Development Banks (MDBs) can raise the USD 15 trillion needed by 2040 to build such infrastructure, including utilities, transport systems, and buildings, as well as social infrastructure. This action would be in line with the intended purpose of MDBs, namely, to give “equitable consideration to projects for development and projects for reconstruction alike.” This Brief illustrates how MDBs can restore existing infrastructure, strengthen at-risk infrastructure, and build new and sustainable infrastructure in the EMDEs by working with National and sub-National Development Banks. It explores how centring inclusivity across operating models, blended finance vehicles, early project development, and public- private partnerships can improve MDB effectiveness. The G20 plays a crucial role in lending decisions given its share ofvote in International Financial Institutions. The New Delhi Leaders’ Declaration notes that the G20 is “working to deliver better, bigger and more effective MDBs by enhancing operating models, improving responsiveness and accessibility, and substantially increasing financing capacity to maximise development impact.” This Brief offers practical recommendations for the G20 to deliver on this commitment.