At the 2022 World Bank/IMF Annual Meetings, shareholders called on World Bank Group management to produce a roadmap to guide the institution in meeting the most pressing challenges of the twenty-first century. In a decade marked by crises beyond the scope of individual nations to tackle, the push for global solutions is timely. Reforming development finance is necessary to successfully meet development needs.
Given its history, global reach, and near-universal membership, the World Bank is the right place to start reimagining the role of multilateral development banks (MDBs) in addressing global challenges. This briefing co-authored by E3G and The Center for Strategic and International Studies (CSIS) suggests actions for the roadmap, in the areas of vision, incentives, operations, and financial capacity. It also proposes timeframes and pathways for enacting reforms in 2023 that will be critical to the World Bank Group’s evolution.
Summary of recommendations
- Shareholders and management should move expeditiously in 2023 to agree the World Bank Group’s evolution to better integrate and scale lending and investment for global public goods (GPGs), in support of national development. This clarity of vision on the Bank’s strategic direction should be communicated in a statement by the Development Committee at the Spring Meetings for endorsement by the Board of Governors.
- Significant additional lending capacity must accompany the Bank’s vision refresh, first and foremost by implementing the recommendations from the G20-commissioned Independent Review of MDB’s Capital Adequacy Frameworks (CAF). Elements of the CAF should be agreed by the 2023 Spring Meetings, along with a clear timeline for implementation.
- The Bank’s country-driven model should remain central but more systematically integrate and scale GPGs into its lending activities. The Bank should also be encouraged to experiment, through pilots, and find novel ways to enhance lending for GPGs.
- The Bank should prioritize a narrow set of GPGs as an initial focus: pandemic preparedness and climate are a good place to start.
- Reflecting the positive externalities of GPGs, the World Bank should incentivize GPG investments with cheaper finance, faster approvals, more flexible borrowing limits, and longer maturities.
- To operationalize the integration of GPGs into the Bank’s country-driven model we offer specific suggestions that build on existing mechanisms; support innovations; and make the case for additional resources. Ultimately, it is key that shareholders and management commit to implementing the Bank’s strategic vision.