Multilateral Financial Institutions Research Articles

Tackling water scarcity in agriculture—Asian Development Bank's perspective

Abstract‘Tackling water scarcity in agriculture’, which is the theme of the 25th Congress of the International Commission on Irrigation and Drainage (ICID), is at the crux of the global challenge of ensuring a climate‐resilient and water‐ and food‐secure world for future generations. The Asian region faces significant threats due to its high vulnerability to climate change impacts and growing food insecurity and water stress across many river basins. The Asian Development Bank (ADB) is stepping up assistance in line with the international commitments by the multilateral financial institutions. There are significant opportunities that are tapped to address this theme, including (i) exploring and replicating highly successful experiences of enhancing irrigated agriculture productivity manifold as seen in the Indian states of Chhattisgarh, Karnataka and Madhya Pradesh and in other South Asian countries; (ii) reinvigorating efforts to operationalize integrated water resources management in river basins; (iii) adopting new technologies, such as remote sensing and automation, and digital technologies, including artificial intelligence; and (iv) pursuing institutional and financing innovations. Resources of ADB and other multilateral institutions can be utilized to develop and demonstrate successful innovations before they are replicated by the own sources of the developing countries.

Retracted: Mathematical Models for Analysis the Impact of Institutional Quality and Multilateral Financial Institutions on the Success of Green PPP Projects

Retracted: Mathematical Models for Analysis the Impact of Institutional Quality and Multilateral Financial Institutions on the Success of Green PPP Projects

Nation Building and International Financings – A Legal Perspective

This article explores the challenges and opportunities for nation building in Nigeria in the context of the immediate aftermath of the 2023 elections, the twilight of the inauguration of the new administration, led by Senator Bola Ahmed Tinubu and the urgent need to address the critical issues of infrastructure deficit, palpable poverty, and inadequate access to basic services.
 The article discusses the importance of international financing as a critical source of funding for sustainable development and highlights the importance of aligning national financing objectives with the United Nations' Sustainable Development Goals (SDGs). It emphasizes the need for clear development plans, coordination of risk mitigation mechanisms, cooperation of multilateral financial institutions and national and subnational committees and agencies, transparent legal and regulatory framework, as well as a robust judicial process, to attract international lenders and ensure effective deployment of financing towards the achievement of national development priorities.

Government Choices of Debt Instruments

Abstract Governments borrow from a range of creditors—commercial banks, sovereign bondholders, official bilateral creditors, and multilateral financial institutions. Sovereigns’ creditor portfolios vary significantly across space and time. While creditor portfolios partly reflect supply-side considerations (macroeconomic profiles and associated default risk), they also reflect governments’ preferences over fiscal transparency. Governments that prefer to disclose less information about economic outcomes will choose borrowing instruments that are less public, such as private loans from banks (versus bondholders) and official sector borrowing from bilateral (versus multilateral) creditors. Empirical analyses of government debt composition across developing nations confirm these predictions. We also find support for our claims at the subnational level, using data from Mexican municipalities. We treat various types of credit (bilateral lending, multilateral finance, and sovereign bonds) as related, rather than distinct.

Conflict-resilience framework for critical infrastructure peacebuilding

Apart from security issues, war-torn societies and countries face immense challenges in rebuilding damaged critical infrastructure. Existing post-conflict recovery frameworks mainly focus on social impacts and mitigation. Also, existing frameworks for resilience to natural hazards are mainly based on design and intervention, yet, they are not fit for post-conflict infrastructure recovery for a number of reasons explained in this paper. Post-conflict peacebuilding can be enhanced when resilience by assessment (RBA) is employed, using standoff observations that include data from disparate remote-sensing sources, e.g. public satellite imagery, forensics and crowdsourcing, collected during the conflict. This paper discusses why conflicts and warfare require a new framework for achieving post-conflict infrastructure resilience. It then introduces a novel post-conflict framework that includes different scales of resilience with a focus on asset and regional resilience. It considers different levels of knowledge, with a focus on standoff observations and data-driven assessments to facilitate prioritisation during reconstruction. The framework is then applied to the transport network of the area west of Kyiv, Ukraine to demonstrate how resilience by assessment can support decision-makers, such as governments and multilateral financial institutions, to address infrastructure needs and accelerate financial and humanitarian assistance, absorb shocks and maximise infrastructure recovery after conflict.

Principles of Environmental Protection Management of Kazakhstani Oil Enterprises

At the current stage of economic development, the formation of a well-thought-out management strategy and general development directions becomes a condition for the successful functioning of any industry, which ensures competitiveness. At the local level, funds spent on environmental protection are insufficient to provide adequate environmental services. Transfers from the central budget are too limited, and local governments are not allowed to work directly with local or foreign banks or multilateral financial institutions. This significantly hinders the financing of much-needed environmental infrastructure improvements. To attract more funds from the central budget, local capital markets and international financial institutions, adequate institutional capacity is needed to properly assess financial costs (investment costs, operating and maintenance costs) and develop environmental projects with well-defined objectives and timelines. sustainability of a sustainable financial strategy. All of these features are still not available locally.

A Sankarian Perspective on the IMF Loans to South Africa – ‘Debt as a Cleverly Organised Reconquest of Africa’

Abstract The COVID-19 pandemic that continues to ravish the world economies and snatch lives of millions of people across the world has without a doubt exacerbated the already fragile over-indebtedness of many countries globally, more especially in Africa. South Africa was used as a case study to better understand the International Financial Institutions and debtor countries nexus through the prisms of Sankarian Thought and philosophy concerning debt and loans. This was because South Africa had not borrowed money from the twin IFIs, IMF and the World Bank, for many years until recently when the pandemic struck the world. It is useful to understand why the multilateral financial institutions such as the IMF, the World Bank and others had to be the last resort in the fight against this pandemic by the South African government. The role of these two main predators that have since flag independence of Africa been the engineers and custodians of debt neo-enslavement of African countries is the common thread in this article. As Sankara argued and was eventually assassinated for, in part, lobbying African States to form a united front in repudiating illegitimate debt, the solution to the African development challenge does not lie in acquiring more aid and loans. It lies in harnessing their own resources and optimally using them to uplift the lives of their people ethically, and that is the only way Africa would eventually be able to call its soul its own. Amongst others, the paper found that a strong case can be made by many African countries for repudiation of odious debt, however, the same cannot be argued for South Africa.

Catalytic Power Europe: Blended Finance in European External Action

AbstractThe global influence of the European Union (EU) has been debated in overlapping strands of literature as ‘normative’, ‘regulatory’ and ‘market power’. They identify the diffusion of its rules and standards as a vehicle of European power. We argue that European power extends beyond its regulatory capacities and includes new ‘catalytic’ capacities in the realm of financing and network building. We analyse blended finance as an instrument of ‘catalytic power’, defined as the mobilisation of partners and their resources to pursue external objectives. The analysis reveals that financial leverage, the original motivation behind the tool's creation, has declined in importance. Instead, blended finance is designed to facilitate and structure cooperation with other European and multilateral financial institutions, positioning the European Commission as a central node in international cooperation and increasing its influence in this sphere. The article closes with a discussion of blended finance as a tool of catalytic power and related trade‐offs.

Viral Governance: How Unilateral U.S. Sanctions Changed the Rules of Financial Capitalism

This article presents how global governance went viral as its targets moved from sovereign to corporate entities and its source from multilateral financial institutions to domestic U.S. institutions. It argues that viral governance describes how the United States rewrote global rules through its sanctions program first against Iran, then against Iran-affiliated global banks and businesses, and finally against the daily compliance practices of global money, information, and technology flows in general. Utilizing over 150 interviews with international experts in the field of sanctions and banking, the article describes the recursive process that led the U.S. government to assume global regulatory powers and to initiate deglobalization in its trade war against the European Union and China. The article concludes that viral governance perpetuates crises, whereas multilateral governance seeks to extinguish crises; it operates through sustained legal uncertainty over the jurisdictional limits of the hegemonic power, while multilateral governance seeks to absorb legal uncertainty; it requires the abolition of all regulatory counterpowers, whereas multilateral governance can allow strong states to assume the equality of sovereign powers.

Mathematical Models for Analysis the Impact of Institutional Quality and Multilateral Financial Institutions on the Success of Green PPP Projects

Green PPP projects are of great significance to green infrastructure construction and green economic development. This study analyzes 552 Green PPP projects related to sewage treatment and clean energy in African countries during 2005-2019 to determine how institution quality and multilateral financial institutions influence Green PPP projects’ success. We find that (1) successful (failed) Green PPP projects experience increase (decrease) new Green PPP projects’ success rate. (2) Higher private capital risk-taking degree increases the likelihood of failure. (3) Institution quality affects project success through a mixed effect on private capital’s risk-taking degree: rule of law, government effectiveness, control of corruption, and regulatory quality positively promote private capital’s risk taking; voice has an opposite effect. (4) Multilateral financial institutions’ participation in Green PPP projects promotes higher private capital risk taking.

Turning Promises into Action: ‘Legal Readiness for Climate Finance’ and Implementing the Paris Agreement

A clear imperative in addressing the climate crisis is to turn finance promises into climate action. This article explores this challenge through the lens of the emerging concept of ‘legal readiness for climate finance’. It is defined as the degree to which a country has coherent regulatory architecture in place, together with requisite domestic technical expertise and institutional capacity, to systematically attract and mobilise finance at scale to address climate change and its impacts. Legal readiness is relevant for all countries; yet it is especially pressing for developing countries that must mobilise finance for implementation of Nationally Determined Contributions pursuant to the Paris Agreement in the context of sustainable development. By drawing on empirical data and theories of regulation, this article presents pioneering research on the legal and regulatory dimensions of climate finance with particular attention to mobilising private finance. It addresses three core questions: what is legal readiness for climate finance; why should countries pursue it; and how can they retain it in light of political vicissitude? In addressing these questions, this article also explores three key learnings about legal readiness for climate finance for the benefit of decision makers in developing countries: strengthen national law and regulation for ‘putting out’ as well as ‘calling in’ climate finance; pursue an integrated regulatory framework to enhance institutional coherence; and seek support from multilateral financial institutions such as the Green Climate Fund for regulatory mapping as well as technical and institutional capacity building (not just project funding). At its heart, this article encourages decision makers to see the challenge of financial implementation of the Paris Agreement as an opportunity for endogenous empowerment.

Multilateral financial institutions of the BRICS member countries in the context of new anti-russian sanctions

The topic is of current interest due to more economic and financial sanctions against Russia. The research takes its root in a standpoint that multilateral financial and economic institutions established on the basis of the BRICS’ agreements may become alternative sources of capital and finance in case of a full blockade of Russia as part of the world financial system. The practical significance of the research’s results sits in the development of approaches to forming a strategy for Russia in relations with multilateral financial institutions of the BRICS to support and finance selected fields of her economic activity under harsh economic conditions based on a targeted model of dealing with friendly and unfriendly countries. The article contains proposals and recommendations about potential adjustment of the Russian foreign economic strategy until 2025.

Equality and Equity in Emerging Multilateral Financial Institutions: The Case of the BRICS Institutions

AbstractThe New Development Bank (NDB) and the BRICS Contingent Reserve Arrangement (CRA) were built by Brazil, Russia, India, China, and South Africa (the BRICS countries) in response to the ‘disappointing’ Bretton Woods Institutions, including the World Bank and the International Monetary Fund (IMF). The main difference between the Bretton Woods Institutions and the BRICS institutions is that the latter adopts an equal‐weight system instead of a weighted voting system in the NDB (all five BRICS countries have equal shares and voting weights regardless of the major differences in their economic weights) and uses consensus instead of majority voting rules to make decisions regarding critical issues in the CRA. In fact, both the equal‐weight system and consensus rule are unprecedented in the history of multilateral financial institutions. The World Bank, the IMF, the Asian Development Bank and even the Asian Infrastructure Investment Bank (AIIB) all adopt weighted voting systems and majority voting rules. We explain why the BRICS countries adopt these unprecedented designs through precise power measurements and carefully designed experiments. First, we measure the voting power of each member of the BRICS’ NDB and CRA under the current decision‐making systems, using this information as a control group. Then, we remeasure the voting power of each member of the NDB under the assumption that their shares and voting weights are allocated according to their economic weights; additionally, we remeasure the voting power of each country of the CRA under the assumption that majority rules are adopted when decisions are being made on critical issues. Moreover, we establish evaluation indices of power equality and power equity based on classic and variant Gini coefficients and Lorenz curves and use them to assess and compare the power structures of the BRICS’ NDB and CRA in the contexts of different voting weight reallocations and different voting rules redesigns. We use these indices to precisely analyse whether the power structures of the BRICS institutions become more equable or equitable in the examined contexts and to investigate the relationship between equality and equity in this setting.

Restricting NGOs: From Pushback to Accommodation

Restricting NGOs: From Pushback to Accommodation

Infrastructure for Structural Transformation: A Comebackof Planning?

This article examines how infrastructure development may best support structural transformation in developing countries. It critiques ongoing emphasis by multilateral financial institutions and other actors on infrastructure as an asset class and their focus on bankable projects. The article considers this approach too narrow for real economic transformation and argues development requires a more holistic approach, one that includes project assessment based on developmental criteria. Drawing on the pioneers of development and more recent literature on infrastructure systems, the article proposes development planning as a more promising approach and assesses how developing countries are faring regarding infrastructure planning for growth and transformation.JEL Classification: H54, O21, O40, P11

The impact of public external debt on private investment. Evidence from Zimbabwe under the multi-currency system.

The levels of public debt have grown significantly in both emerging and developed countries even during times of peace. The rising levels of debt pose substantial debt sustainability issues to developing countries including Zimbabwe. A defaulting country usually has limited access to new international credit lines or tends to borrow at a higher cost, due to high perceived country risk premium, making the country a less attractive investment destination. Zimbabwe is currently suffering debt distress and has since the year 2000 struggled to service her external debt from international multilateral financial institutions. Zimbabwe’s external debt continues to pile up due to penalties on defaults. This paper examines the impact of public external debt on private investment in Zimbabwe, using quarterly time-series data for the period 2009 and 2017. The period of study was a period of relative stability when Zimbabwe operated under a multicurrency system. Interest rates, political risk, trade openness and household consumption are control variables of this study. Using the Vector Error Correction Model (VECM), we find that external debt and external debt squared have a negative impact on private investment in the long run. Results suggest that Zimbabwe’s external debt is crowding out private investment. In the short-term, we urge the government of Zimbabwe to apply for debt rescheduling to avoid penalties that have so far contributed to the ballooning of Zimbabwe’s external debt obligations. In the medium term, we urge the government of Zimbabwe to design comprehensive debt and arrears reduction strategies, to reduce Zimbabwe’s external debt to sustainable levels. In the long term, after regaining borrowing rights, we urge the government of Zimbabwe to invest external borrowings in productive ventures, to facilitate debt amortisation. Secondly, we recommend that external debt be invested in education, health and infrastructure, which can potentially stimulate private investment, and thus create a multiplier effect on economic growth. Lastly, we recommend the government to invest foreign loans in sectors where Zimbabwe enjoys a comparative advantage, to ensure reliable export revenue for debt servicing.

Leveraging community based organizations and fintech to improve small-scale renewable energy financing in sub-Saharan Africa

Clean and modern energy is still inaccessible for large sections of rural populations globally with sub-Saharan Africa being the largest. Rising population and unfolding climate change only compound this problem. However, sub-Saharan countries – especially ones with large populations and economies – must find avenues to sustainably finance renewable energy development, including in otherwise ignored rural areas where climate vulnerability is disproportionately high. Here we argue that small-scale renewable energy financing from Multilateral Financial Institutions (MFIs), banks and government has been long neglected and combining the inherent strengths of Community Based Organisations (CBOs) with technology can help improve access to small-scale renewable energy finance in rural sub-Saharan Africa.

The Belt and Road Initiative and the AIIB: Potential Impact on the Economic Architecture of Asia

Dynamics of economic development in Asia in the first two decades of the 21st century can be visualized schematically as a series of waves with different focuses of economic activities of regional powers and prevailing regional economic agenda. The first decade of this century was marked by an increasing number of bilateral free trade agreements, the establishment of ASEAN+1 free trade zones and very general in nature discussions on the prospects for the establishment of a large regional integration block. The US ‘Pivot to Asia’ has promoted transformation of these abstract discussions into substantive debates on parameters and principles of a broader regional trading and economic cooperation arrangement. The second wave in the development of economic processes in Asia (from 2010 to 2017) was characterized by a ‘soft’ rivalry between the US and China for setting the priority model of economic integration in the region (Trans-Pacific Economic Partnership vs. Regional Comprehensive Economic Partnership) and for establishing rules of a regional trade and investment system. The third wave followed the launch of the Belt and Road Initiative and AIIB, which expanded the focus of the regional countries’ activities from trade liberalization to promoting regional infrastructure development and connectivity. The author aims to assess the role of the Belt and Road and AIIB initiatives in consolidating China’s position in Asia, as well as their potential impact on the regional economic architecture. The first section outlines economic processes in China and in the region in general, which provided a context for establishing the Belt and Road and AIIB initiatives. The second and third sections examine their impact on regional economic processes and on the PRC’s regional positions. The author accentuates substantive changes that these initiatives underwent in 2013-2019 and identifies their intermediate outcomes. The author concludes that the Belt and Road and AIIB initiatives reflect the PRC’s intent to convert its growing economic and financial capabilities into regional influence. The establishment of new multilateral financial institutions, development of new rules governing trade, investment and economic activities, adoption of new production and technical standards, transformation of the regional transport and logistics system, development of new value chains, and other outcomes of foreign economic activities of China already has the potential to reshape the regional economic architecture.

SME Financing in MENA: A Quantitative and Qualitative Analysis of Multilateral and Bilateral Development Lenders’ Intermediated Lending Practices

AbstractThis paper documents for the first time the considerable increase of bilateral and multilateral financial institutions’ support to small- and medium-sized enterprises (SMEs) in the Middle East and North Africa (MENA), following the political unrest and civil strife across the region since 2011. Focusing upon intermediated lending, the main financing channel, it assesses the underlying economic logic and implementation of this kind of SME financing. It is found that SMEs’ contribution to economic development is insufficiently well understood and, to some extent, has been misinterpreted, which implies that development banks’ lending operations lack appropriate targeting to achieve economic and social lending objectives. A review of the academic literature on financial exclusion and development finance, moreover, concludes that the lenders’ reliance upon large, often foreign-owned, commercial banks is not likely to achieve the desired developmental impact.

COVID-19 Pandemic Recession and Recovery.

This review draws pragmatic lessons for developing countries to address COVID-19-induced recessions and to sustain a developmental recovery. These recessions are unique, caused initially by supply disruptions, largely due to government-imposed ‘stay-in-shelter lockdowns’. These have interacted with falling incomes and demand, declining exports (and imports), collapsing commodity prices, shrinking travel and tourism, decreasing remittances and foreign exchange shortages. Highlighting implications for employment, wellbeing and development, it argues that governments need to design comprehensive relief measures and recovery policies to address short-term problems. These should prevent cash-flow predicaments from becoming full-blown solvency crises. Instead of returning to the status quo ante, developing countries’ capacities and capabilities need to be enhanced to address long-term sustainable development challenges. Multilateral financial institutions should intermediate with financial sources at low cost to supplement the International Monetary Fund’s Special Drawing Rights to lower borrowing costs for relief and recovery.