Multilateral Development Bank (MDB)
Candlefocus EditorMDBs typically have three functions: they provide guidance and expertise to governments; they finance large-scale projects; and they play a role in shaping domestic policies. They have become significant financial actors in the global economy – combined, the top five MDBs (the International Monetary Fund, the World Bank, the Asian Development Bank, the African Development Bank, and the Inter-American Development Bank) own trillions of dollars in assets, hold millions of dollars in deposits, and attain investments from both private investors and sovereign governments. MDBs also promote global cooperation by facilitating communication among nations – for example, the African Development Bank is the leading voice on African economic developments and trends to the rest of the world.
MDBs finance projects in multiple sectors. These projects range from the development of roads, bridges, and power grids, to the creation of public and private businesses, to the financial support of education, health, and sustainability initiatives. MDBs provide both grant funds (which do not need to be repaid) and low-interest loans (which require repayment). These projects lay the groundwork for economic development by improving infrastructure, creating jobs, and raising living standards.
MDBs are not just institutional lenders – they often set global standards and criteria for economic development and have become major agents of economic reform. For example, the World Bank views the protection of the environment and the alleviation of poverty as major goals, and is committed to helping countries adopt and implement Sustainable Development Goals in the fight against poverty and climate change.
The importance of MDBs in global development and economic stability cannot be underestimated. MDBs are the cornerstone of development through long-term financing, policy advice, and technical assistance. They are not only important financial institutions, but also play a key role in setting and promoting global standards of development.