To improve the understanding of callable capital and inform policy decisions by key stakeholders related to the second recommendation of the G20 Independent Panel on Multilateral Development Banks' Capital Adequacy Frameworks report (2022), the MDB Challenge Fund is supporting an ODI-led research project on callable capital.

The project aims to evaluate how MDBs can best make use of callable capital to underpin greater development lending. In doing so, it will generate evidence and analysis to provide guidance for how callable can be better integrated into the capital adequacy frameworks of MDBs; 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.