The authors analyze the exchange rate and balance of payment crisis risks when MDBs lend, in hard currency, to NDBs, for NDBs to onlend to investment projects. Investment projects maybe “export-enhancing” (EXIPs), which generate hard currency (for example, building a port or developing export agriculture), or “domesticoriented” (DOIPs), which don’t generate hard currency (for example, a solar farm or a sewage system). If MDBs want to increase the proportion of onlending to DOIPs, they need to increase their refinancing to NDBs, and allow more time to pay back the loans. Further, MDBs need to reduce the interest rate charged on NDBs.
This Research Paper is published in the framework of the International Research Initiative on Public Development Banks working groups and released for the occasion of the 14th AFD International Research Conference on Development.
It is part of the pilot research program “Realizing the Potential of Public Development Banks for Achieving Sustainable Development Goals”. This program was launched, along with the International Research Initiative on Public Development Banks (PDBs), by the Institute of New Structural Economics (INSE) at Peking University, and sponsored by the Agence française de développement (AFD), Ford Foundation and International Development Finance Club (IDFC).
Have a look on the key findings for a quick overview of the research results
-
on the same region
Vidéopublished in June 2025Research documentpublished in November 2024Research documentpublished in November 2024Research documentpublished in September 2024Institutional documentGovernance and Operationspublished in September 2024Institutional documentStrategy Documentspublished in February 2024 -
on the same topic
Research documentpublished in June 2025Research documentpublished in May 2025Institutional documentReviews and Activity ReportsEvaluation documentpublished in May 2025Institutional documentReviews and Activity ReportsEvaluation documentpublished in May 2025Reviews and Activity Reportspublished in May 2025Research documentpublished in May 2025 -
in the same collection
Research documentpublished in May 2025Research documentpublished in May 2025Research documentpublished in April 2025Research documentpublished in April 2025Research documentpublished in March 2025Research documentpublished in February 2025