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Multilateral Development Banks

The Kali Gandaki dam in Nepal. Photo: Flickr/Asian Development Bank

 

Overview

Multilateral development banks (MDBs) are financial institutions with a membership base consisting of both donor and borrowing nations. They offer grants, concessional and non-concessional loans to developing countries. Financing decisions are made collectively and reflect voter share. There are dozens of global and ‘sub-regional’ MDBs and the following are those that are either new to the development landscape or most actively engaged in the Indo-Pacific region.

The World Bank Group was set up at the end of World War II for reconstruction and development. Today, the multi-faceted World Bank Group has 188 member countries and is part of the United Nations Development Group. It is dedicated to poverty reduction and eradication around the world and has subscribed capital of $252 billion as of 2015.

The Asian Development Bank was established alongside other regional development banks. It currently has 67 members and a vision to reduce poverty and improve the quality of life in Asia and the Pacific. It has subscribed capital of $162 billion as of 2013.

The Chinese-led Asian Investment Infrastructure Bank (AIIB) has 57 prospective members, a capital base of $100 billion, and a mandate to finance regional infrastructure. The AIIB promises to be ‘lean, clean, and green’. It intends to start lending by the end of 2015.

The BRICS New Development Bank established by Brazil, Russia, India, China, and South Africa, will also have a capital base of $100 billion. Currently, it has $50 billion subscribed capital split equally between its five members.

Australia is a member of all of the above banks, except the New Development Bank.

 

What the Lowy Institute does

The Lowy Institute monitors the activities of the multilateral banks in the areas of economics, geopolitics, and development. The G20 Studies Centre covers the intersection of the banks with global economic governance, investment, and the development agenda. This includes monitoring the progress of the Sydney-based Global Infrastructure Hub, created to increase global investment in infrastructure. The Melanesia Program focuses on the activities of the banks in the Pacific.

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