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Backstopping multilateral development banks: the fiscal context of callable capital for shareholder governments

Working paper

Written by Bianca Getzel

Image credit:Photo by Photo Boards on Unsplash

Callable capital is an international treaty obligation with a nominal value of $891 billion across seven major multilateral development banks (MDBs). It is a specialised type of guarantee committed by government shareholders as a last resort for repaying bond holders in the event of an extreme shock to MDB finances.

Despite its history, as a central pillar of the MDB financial model since 1944, very little is understood about callable capital.

A key factor fuelling this uncertainty is the process by which member governments would meet a hypothetical capital call.

To help fill this knowledge gap, this paper – part of a broader ODI project on callable capital – gathers information from 21 governments who collectively represent 59.5% of callable capital commitments (US$530 billion) across the seven major MDBs.