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CRS: Multilateral Development Banks: Overview and Issues for Congress

Author: Rebecca M. Nelson
April 18, 2012


International trade and finance analyst Rebecca M. Nelson offers an overview of multilateral development banks and outlines the issues they present for the United States Congress in this Congressional Research Service report.

The multilateral development banks (MDBs) include the World Bank and four smaller regional development banks: the African Development Bank (AfDB), the Asian Development Bank (AsDB), the European Bank for Reconstruction and Development (EBRD), and the InterAmerican Development Bank (IDB). The United States is a member of, and major donor to, each of the MDBs.

The MDBs provide financial assistance to developing countries in order to promote economic and social development. They primarily fund large infrastructure and other development projects and, increasingly, provide loans tied to policy reforms by the government. The MDBs provide nonconcessional financial assistance to middle-income countries and some creditworthy low-income countries on market-based terms. They also provide concessional assistance, including grants and loans at below-market rate interest rates, to low-income countries.

Critics argue that the MDBs focus on "getting money out the door" (rather than delivering results), are not transparent, and lack a clear division of labor. They also argue that providing aid multilaterally relinquishes U.S. control over where and how the money is spent. Proponents argue that providing assistance to developing countries is the "right" thing to do and has been successful in helping developing countries make strides in health and education over the past four decades. They also argue that MDB assistance is important for leveraging funds from bilateral donors, promoting policy reforms, and enhancing U.S. leadership.

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