S&P Global Ratings released new guidance last week on how it rates and assesses risk at multilateral development banks — a change that could prove significant.
“The Multilateral Lending Institutions’ (MLI) criteria change will lead to meaningful improvements in capital positions and could unlock $600 billion to $800 billion in additional sovereign lending capacity,” S&P wrote in the introduction to a report released last week.
That means MDBs could collectively add billions to their balance sheets while retaining their current ratings, according to S&P. Development finance experts call it a “good sign” and a “step forward,” but stress it doesn’t mean MDBs can suddenly expand lending.