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Multilateral Development Banks
Multilateral Development Banks (MDBs) are institutions that provide financial support and professional advice for economic and social development activities in developing countries. The term Multilateral Development Banks typically refers to the World Bank Group and four Regional Development Banks:
- These banks are characterized by a broad membership, including both borrowing developing countries and developed donor countries, and not limited to member countries from the region of a regional development bank. Each bank has its own independent legal and operational status - but with a similar mandate and a considerable number of joint owners, the MDBs maintain a high level of cooperation. The MDBs provide financing for development through the following:
- Long-term loans, based on market interest. For funding these loans the MDBs borrow on the international capital markets and re-lend to borrowing governments in developing countries.
- Very long-term loans (often termed credits), with interest well below market interest. These are funded through direct contributions for governments in donor countries.
- Grant financing is also offered by some MDBs, mostly for technical assistance, advisory services or project preparation.
The World Bank Group The World Bank is a vital source of financial and technical assistance to developing countries around the world. It is not a bank in the common sense. It is made up of two unique development institutions owned by 185 member countries-the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).
Each institution plays a different but supportive role in its mission of global poverty reduction and the improvement of living standards. The IBRD focuses on middle income and creditworthy poor countries, while IDA focuses on the poorest countries in the world. Together it provides low-interest loans, interest-free credit and grants to developing countries for education, health, infrastructure, communications and many other purposes.
The African Development Bank (ADB) The African Development Bank is a multilateral development bank whose shareholders include 53 African countries and 24 non-African countries from the Americas, Asia, and Europe. It was established in 1964, with its headquarters in Abidjan, Cote d'Ivoire, and officially began operations in 1967. The AfDB is the premier financial development institution of Africa, dedicated to combating poverty and improving the lives of people of the continent and engaged in the task of mobilizing resources towards the economic and social progress of its Regional Member Countries. The Bank's mission is to promote economic and social development through loans, equity investments, and technical assistance.
The African Development Bank (AfDB) The work of the Asian Development Bank is aimed at improving the welfare of the people in Asia and the Pacific, particularly the 1.9 billion who live on less than two dollars a day. Despite many success stories, Asia and the Pacific remain home to two thirds of the world's poor. ADB's annual lending volume is typically about $6 billion, with technical assistance usually totaling about $180 million a year.
The European Bank for Reconstruction and Development (EBRD) The European Bank for Reconstruction and Development was established in 1991 when communism was crumbling in central and Eastern Europe and ex-Soviet countries needed support to nurture a new private sector in a democratic environment. Today the EBRD uses the tools of investment to help build market economies and democracies in countries from central Europe to central Asia. It provides project financing for banks, industries and businesses, both new ventures and investments in existing companies. It also works with publicly owned companies, to support privatization, restructuring state-owned firms and improvement of municipal services. The Bank uses its close relationship with governments in the region to promote policies that will bolster the business environment.
Inter-American Development Bank The Inter-American Development Bank helps foster sustainable economic and social development in Latin America and the Caribbean through its lending operations, leadership in regional initiatives, research and knowledge dissemination activities, institutes and programs. The Bank assists its Latin American and Caribbean borrowing member countries in formulating development policies and provides financing and technical assistance to achieve environmentally sustainable economic growth and increase competitiveness, enhance social equity and fight poverty, modernize the state, and foster free trade and regional integration. Public entities eligible to borrow from the Bank include national, provincial, state and municipal governments, and autonomous public institutions. Civil society organizations and private companies are also eligible.
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