Improving Focus Of Multilateral Development Banks For Better Supporting Modern Challenges Of Sustainable Development

International development challenges continue to add to the already ambitious agenda of Multilateral Development Banks (MDBs). They include but are not limited to climate change, rising threats in health, energy, and food security, digitalization, assistance in post-conflict states, and debt challenges. These challenges form substantial financing gaps that exceed available MDBs resources. The G20 delivered a Triple Agenda Report, and MDBs are working intensively to enhance their mandates, raise additional resources, and improve operational models and eligibility frameworks to address pressing agenda. The authors emphasize that the G20, together with MDBs, has an ambitious agenda for mobilization of financing in order to address the challenges. As the most obvious option, the G20 should agree on targets and an action plan for MDBs capital increase. In parallel, authors argue that the G20 and MDBs should shift their focus on “assets” side improvements. Specifically, MDBs need to streamline their resource allocation and project selection, and country eligibility frameworks. The G20 could also do more to promote blended finance in development in order to leverage private sector financing to address vast financing gaps. The policy brief provides recommendations on the following issues. It suggests enhancing MDBs eligibility frameworks by drafting updated vulnerability index to be among criteria for allocation of the MDB resources. It also looks at blended finance as a mechanism to increase MDBs lending within available capital resources by leveraging private sector funds.