It seems multilateral development banks are looking to get by with a little help from their friends.
There have been a few recent deals where MDBs have worked together to unlock more funding and reduce risk. Last week the Asian Development Bank and the African Development Bank agreed to a $1 billion risk transfer agreement. That’s a tool through which they can exchange loan exposure so that their portfolio risk is more diversified. It can increase both their creditworthiness and how much they can lend.
And earlier this month the Asian Infrastructure Investment Bank, the China-based institution under increasing scrutiny for its ties to the country, approved $1 billion in credit guarantees to support World Bank sovereign lending — which will transfer some of the risk to AIIB and allow the World Bank to lend more.