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Fact Sheet: Leveraging Through the International Financial Institutions

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The emphasis of international financial institutions (IFIs) has been gradually shifting from direct financing to policy support of developing countries. Their role in financing declined further to 8 percent of net ODA, whereas their leverage in achieving collective action on development remains strong, including in combating climate change.

Arrow All IFIs have adapted their strategies to the rapidly changing environment by focusing on the specific needs of countries. IFIs also put more emphasis on providing knowledge and learning services, and promoting global and regional public goods. 

Strategic shifts by MDBs

  Inclusive and Sustainable Globalization Knowledge and Learning Regional and Global Public Goods 
IMFScaled-up inflows to LICs
Economic Recovery Assistance program
Emergency post-conflict Assistance
Modernizing surveillance
Multilateral and regional consultations
Assessing vulnerabilities to capital flows
Financial Stability
World Bank GroupAfrica
Fragile States
Middle Income Countries
Scaling-up aid delivery
Private sector development
Provide World Class Knowledge
Knowledge sharing and learning between clients
Governance and anti-corruption
Climate change
Health
Trade
International financial architecture
African Development Bank Infrastructure
Private Sector Development
Middle income countries
Post-conflict and post-crisis countries
Governance
Economic and Financial Reforms
African experiences and perspectives
Regional integration
Environment and Climate Change
Asian Development Bank Infrastructure
Financial Development
Knowledge ManagementRegional integration
Regional financial markets
European Bank for Reconstruction and Development Early and intermediate transition countries, RussiaLife in transition SurveySustainable Energy Initiative
Energy Efficiency and Climate Change team
Inter-American Development Bank Opportunities for the Majority initiative
Infrastructure Investment Fund
Disaster Prevention Fund
Water and Sanitation Initiative
New evaluability instrumentSustainable Energy and Climate Change initiative
Operational trends and results 

green arrowMDBs’ gross disbursements amounted to $49 billion in 2007. Of this, $37 billion was in non-concessional resources, up from $25 billion in 2005. Demand for new non-concessional sovereign loans remains generally flat. 
green arrowAfrica now receives 45 percent of total concessional flows, up from 37 percent in 2000. 
 green arrow IDA15 will allow for $41.6 billion of new commitments between FY2009-11. Fig 5.2 - WB Knowledge Service Inputs - Large 
Click graph to enlarge
 green arrow Trust funds are a rapidly growing business segment for the MDBs. 
green arrowMDBs’ non-sovereign flows (lending and equity investments) have grown sharply in recent years, from $3.1 billion in 2000 to $13.3 billion in 2007. The IFC accounts for half of this, while the rest is accounted for by the regional development banks, mainly EBRD. 
green arrowKnowledge services have been steadily expanding and are increasingly done jointly with partner countries or with other donors. The IMF is adapting its macroeconomic advice to the changing needs of countries, making use of cross-country knowledge. It is using its recently established Policy Support Instrument to provide policy support for low-income countries that do not need financial assistance from the IMF but want its advice, monitoring, and endorsement of their economic policies. 
green arrowIn 2006, progress in harmonization and alignment was being made in only half the countries surveyed. With harmonization efforts being made at the country level, MDBs have pursued decentralization of their operations to the field. 
green arrowIn line with their changing strategies, MDBs have adjusted the sectoral composition of new commitments: infrastructure has re-emerged as a major sector. 
Results orientation of the Multilateral Development Banks
green arrowThe Common Performance Assessment System (COMPAS) report provides a common source of information on the results orientation of the MDBs’ internal practices and operational relationships with country and development partners. The table below highlights some of the findings from the 2007 COMPAS report. 

MDB

 Results

African Development Bank

  • 12% increase in number of country strategies showing satisfactory or better results (independent ex-post evaluation)

Asian Development Bank

  • 12% increase in proportion of projects with satisfactory or better ratings for development outcomes

EBRD

  • An increase in disbursement ratio from 55 to 60 %.

IDB

  • 13% increase in number of countries assisted in strengthening results management capacity

World Bank

  • 27% increase in share of projects with baseline data, monitoring indicators and target outcomes
  • 41% increase in share of projects with satisfactory or better rating in independent ex-post evaluation
How the IFIs Promote Environmental Sustainability 
 green arrow All IFIs have mainstreamed environmental issues into their country work and are now developing climate change strategies and policies to help clients with mitigation and adaptation. Fig 5.7 - Active WB Environment Portfolio - Large 
Click graph to enlarge
green arrowWorld Bank investment lending for Environment and Natural Resources Management (ENRM) between 2002 and 2007 amounted to $10.2 billion. This constituted about 10.4 percent of total Bank lending. Development policy lending for environmental policy and institutional reforms rose sharply from $59 million in 2004 to $264 million in 2006. 
green arrowThere has been significant World Bank progress in development of carbon markets: the Umbrella Carbon Facility was launched in August 2006 and is now fully funded with total capital of $1 billion. Two new Carbon Facilities—the Carbon Partnership Facility (CPF) and a Forest Carbon Partnership Facility (FCPF)—were launched in December 2007 to scale up carbon finance. 
green arrowIn the past 10 years, ADB has supported 113 investment projects with environmental objectives or elements with a cumulative value of $8.4 billion, averaging $720 million a year and representing about 12 percent of ADB’s overall annual investments. These investments reached a high of 21 percent of the total in 2006. 
green arrowEBRD’s cumulative environmental investments were $3.8 billion between 2002 and 2006, including projects dealing with municipal environmental infrastructure, energy efficiency, and clean-up operations. 
green arrowOver the same period, the IDB approved a total of 79 environmental loans, investing $2 billion. The focus was primarily on water and sanitation (88 percent). Environmental lending amounted to about 10 percent of total Bank lending. 



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