Executive summary

In 2023, building on the Triple Agenda report, G20 Finance Ministers tasked the International Financial Architecture Working Group with making multilateral development banks (MDBs) better, bolder, and bigger. The resulting 2024 G20 Roadmap for MDBs provided 13 recommendations on operational reforms, private capital mobilisation, and risk management. While MDBs have expanded balance sheet headroom and improved co-operation through joint reports and mutual reliance agreements, the pace of progress remains insufficient. Since 2000, aggregate MDB commitments have grown by only 1% per year in real terms. Furthermore, one-quarter of developing economies are projected to be poorer in 2026 than they were in 2019 on the eve of the COVID-19 crisis.

The changing development landscape

Growth in emerging markets and developing economies (EMDEs) remains low and uneven. One in four EMDEs has a per capita income below its 2019 level, with low-income country growth averaging less than 2% per year. By 2050, over 2 billion people in EMDEs (excluding China) are expected to enter the middle class, creating immense demand for infrastructure. India alone requires an estimated $2.4 trillion in urban infrastructure by 2050. Technology shifts are also significant; global electricity demand grew by nearly 3% in 2025, and solar module prices fell below 9 cents/watt in the same year. Artificial intelligence (AI) could generate 0.6% annual productivity growth in EMDEs by the 2030s, provided countries invest in digital infrastructure and human capital.

The financing shift

The financing environment has deteriorated significantly. Official development assistance (ODA) fell by $38 billion (23.1%) between 2024 and 2025, the largest annual decline in history. Major donors including the US (57% cut), Germany (17%), and the UK (11%) reduced aid simultaneously. China has transitioned from a net lender to a net capital extractor, with peak lending of $50 billion per year in 2016 falling to an average of $7 billion since 2023. Private capital flows remain flat, with foreign direct investment declining as a share of GDP. Conversely, national development banks have risen as a counterweight, with over 550 institutions managing $23 trillion in assets.

Reforms and priorities for MDBs

To address these challenges, MDBs must scale investment finance. Reforms to capital adequacy frameworks (CAF) could unlock over $650 billion in additional lending headroom. However, usage has been slow; for instance, the International Bank for Reconstruction and Development (IBRD) has not yet reached its lowered equity-to-loan ratio targets. Recommendation 1 suggests MDBs articulate time-bound plans for using existing headroom. Recommendation 3 advises enhancing capital adequacy to permit a tripling of lending in a decade, while Recommendation 4 calls for lifting MIGA’s gross underwriting capacity to $100 billion by 2035.

Private capital mobilisation (PCM) is a priority, having grown by 15% per year in real terms between 2021 and 2024. However, 58% of PCM is concentrated in high-income countries, and it fell by 36% in low-income countries in 2024. Recommendation 5 suggests MDBs place a big bet on originate-to-distribute mechanisms to repackage and sell assets, while Recommendation 6 proposes a joint stocktake of PCM strategy.

Speed and delivery

MDBs must move from project-based to programmatic financing through country-led platforms. These platforms address the problem of system-wide transformation that project-by-project lending is too slow to deliver. Recommendation 7 urges MDBs to support sectoral policy and project pipeline planning. A successful model is Mission 300, which connected 50 million Africans to electricity in its first three years (July 1, 2023 to June 30, 2026). Recommendation 11 encourages shifting focus to such multi-country programmes with strong measurement infrastructure. Additionally, Recommendation 9 calls for the mutual harmonisation of standards to reduce bureaucratic delays, as 44% of officials still describe the project cycle as extremely long.

Reach: targeting MDB concessional financing to where it is needed most

With the collapse of ODA, MDB concessional windows are vital for the poorest nations. Currently, International Development Association (IDA) allocations are skewed, with 54% of resources going to countries above the operational cutoff. Recommendation 12 states that IDA should orient concessional financing specifically to low-income and conflict-affected countries. Recommendation 13 suggests making the transition from concessional to non-concessional windows more automatic and transparent by proactively reviewing the creditworthiness of qualifying countries.

Achieving impact in a fragmented international context

Ultimately, impact matters more than volume. Borrowing countries judge MDBs by results, growth, and resilience rather than financing numbers. Recommendation 14 proposes that the G20 periodically commission an independent review of MDB reform progress. MDBs must resist treating reforms as a vehicle for the priorities of non-borrowing shareholders and instead maintain a focus on the development of client countries.