Firstly, multilateral development banks (MDBs) are the largest source of development finance in the world. According to the Bank Information Center, MDBs typically lend $30 to $40 billion dollars a year to low and middle income countries.[1]

Secondly, MDBs also strongly influence the direction of development policies through the generation of technical research, analysis and statistics concerning aid and development.[2] Many donor countries and development institutions, including Australia, take the lead from MDBs, especially the World Bank.

The 2006 White Paper on Australia’s aid program, for example, draws almost solely on World Bank-generated knowledge.[3] In discussing the extent of poverty (and therefore how poverty is defined), the place of aid versus trade, lessons about the appropriate role of aid, and the focus on fragile states, the White Paper cites World Bank sources and articulates the World Bank’s neoliberal framework on poverty and economic growth, globalisation and the role of institutions and private investment in development.

The vast majority of Australia’s funding for MDBs is channelled through the World Bank and Asian Development Bank.[4] In 2007-08 over $500 million of Australian aid money was given to and through the two banks, which accounted for 50% of money delivered through international and regional organisations. As the 2010-11 aid budget states “The World Bank and Asian Development Bank continue to be central partners for Australia’s aid.”[5]

The table and graphs below provide some information on the structure and operations of the World Bank and ADB, with a particular focus on their concessional lending arms, that is, the International Development Association (IDA) and Asian Development Fund (ADF).

For more information and critiques on the structure, role and operations of the banks, see:

World Bank (IDA) and ADB (ADF) at a glance

Where do the banks spend the money?

Source: World Bank Annual Report

Source: Asian Development Bank Annual Report

What do the banks spend the money on?

The World Bank and ADB run a large variety of programs from infrastructure development to small loans often termed ‘microfinance’ to education and health programs. Despite the diversity of projects, in 2009 both the World Bank (IDA) and ADB (ADF) devoted about 40% of their lending towards economic infrastructure, that is the combined sectors of transport and communication, energy and mining, and tourism and trade.

 

 

 

 

 

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Last updated 12 November 2010


[1] Bank Information Center, Institutions, http://www.bicusa.org/en/Institutions.aspx Accessed 8 November 2010

[2] Ibid.

[3] See especially sections 2.1, 2.3, 2.4 and 2.5 of the White Paper

[4] Australia also gives aid money to the International Monetary Fund (around $2.8 million in 2007-08)

[5] Australia’s International Development Assistance Budget 2010-11, 11 May 2011, p.59.

http://www.budget.gov.au/2010-11/content/ministerial_statements/ausaid/download/ms_ausaid.pdf

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