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Maximising the developmental value of MDB callable capital

Image credit:Notes in different currencies. Image license:Jason Leung / Unsplash

The project aims to increase understanding of what callable capital is and how it can be better integrated into multilateral development banks' (MDBs) capital adequacy frameworks. In doing so, it will generate evidence and analysis to provide guidance for how Recommendation 2 of the Independent Panel report might be implemented; reduce uncertainty on the circumstances and likelihood of a capital call; and contextualise how callable capital fits into the broader framework of capacities, policies and processes at MDBs.

Callable capital is central to the unique financial model of MDBs, but no one is sure what it is worth. In light of the huge development needs around the world and the scarcity of MDB capital, that is no longer acceptable. This project is designed to generate evidence that can help government shareholders, MDB management and credit rating agencies better understand the financial strength and lending capacity of MDBs and take decisions accordingly. Making the best use of callable capital is a key part of modernising the financial operations of MDBs to face the challenges of the coming decades.

This project is funded by the Multilateral Development Banks Challenge Fund. The Fund is a collaborative venture of the Bill & Melinda Gates Foundation, The Rockefeller Foundation, and Open Society Foundations. It aims to accelerate MDB financing for the United Nations’ Sustainable Development Goals (SDGs) and the Paris Climate Agreement, in line with the recommendations included in the G20 Independent Review of MDBs’ Capital Adequacy Frameworks report released in July 2022.

Maximising the developmental value of MDB callable capital: a new research agenda

With the support of the MDB Challenge Fund, we have launched a new research project to evaluate how MDBs can best make use of callable capital to underpin greater development lending.

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