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Reality is not yet matching rhetoric in moving from “billions to trillions” to finance the SDGs—how can we accelerate sustainable development finance?
To meet the Sustainable Development Goals (SDGs), the world must ramp up development financing from billions to trillions of dollars. We must think beyond aid, to private finance, and unlocking developing countries’ own resources. The roles of financiers and developing country partners in mobilizing and allocating aid needs to change so that the international community can focus not only on country-by-country development, but also on pressing shared problems, such as climate change and the threat of pandemics.
At the same time that the world is looking to scale up development financing, the development financing system is becoming more complex. There are new donors, like China and India, with different development paradigms. And the emergence of new multilateral development agencies and national development banks add resources to the mix, but raise the question of whether new models of international cooperation are needed to maximize the leverage of scarce financing.
Our research focuses on five questions: How can the international financial system produce sufficient funding for development? How should it be allocated to help countries meet the SDGs and confront global challenges, such as climate change and pandemics? How can financing most effectively mobilize private capital, safeguard public monies, and keep debt levels sustainable? How can domestic resources be mobilized within developing countries? And how should existing institutions be changed to best cooperate?
China's loans aren't debt traps, researchers say, but interest rates are consistently higher than World Bank
Center for Global Development
WASHINGTON – As the COVID-19 economic crisis brings about rising concerns over debt sustainability in developing countries, a new report from the Center for Global Development (CGD) finds that China's loans tend to have shorter grace periods and maturities and higher interest rates than loans from the World Bank.
“With developing countries taking an economic hit from the COVID-19 pandemic, there’s a real concern about debt risks in developing countries—many of which were already at risk of debt distress. China is now the largest bilateral lender in the world, so decisions made in Beijing have a huge impact on the economies of developing countries,” said Scott Morris, a senior fellow at CGD and an author of the report.
“We found that China's loans have consistently contained harder terms than the World Bank, particularly for the poorest countries. Most of the discussions of debt vulnerability in developing countries have focused on the overall amount of borrowing, but the shift in loan terms matters a lot too,” said Brad Parks, the executive director of AidData and an author of the report. “That said, while we have concerns, we don’t find evidence for the ‘debt trap’ narrative. A few percentage points more in interest compared to the World Bank hardly seems usurious.”
With a lack of official Chinese government data on its lending programs, the researchers created a database of 2,453 loans from China and 4,859 loans from the World Bank for comparison, spanning 157 countries and 15 years. Data includes loan-by-loan information on interest rates, maturities, and grace periods, including for projects that fall under the Belt and Road Initiative.
Total Financing (USD)
Average Loan Size (USD)
Average Grant Size (USD)
Total Number of Projects
Volume of Grants (% total financing)
Volume of Loans
Weighted Mean Interest Rate
Weighted Mean Maturity (years)
Weighted Mean Grace Period (years)
“It's clear that developing country governments find value in China’s lending, compared to what they can get on the markets. But it's incredibly important that the Chinese government, which has a stated commitment to debt sustainability, carry out its lending program in a way that doesn’t heighten debt risks in its partners,” Morris said.
“The IMF and the World Bank are calling for lenders to step up and help developing countries with their debt obligations during the crisis. As one of the world’s leading creditors, this is a good opportunity for Beijing to show that it’s sensitive to debt risks.”
The full report and dataset are available at https://www.cgdev.org/publication/chinese-and-world-bank-lending-terms-systematic-comparison
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Under managing director Christine Lagarde, the International Monetary Fund (IMF) has become a champion for gender equality. This note examines how much the IMF’s dialogue with its member countries has changed as a result of the labeling of gender as a "macrocritical" issue. In short, there has been increased attention to the issue as reflected in word counts and discussion of women’s labor force participation, but there is still a long way to go.
Last week the World Bank announced the process for choosing the next president of the organization. Minutes after midnight on the first day nominations were to be accepted, the US formally nominated the incumbent Jim Kim. Other nominations are possible in what is, allegedly, an “open, merit-based, and transparent” process, but which will only be “open” for three weeks. Here are five women who could ably lead the World Bank.
This report explains how Development Impact Bonds (DIBs) can increase the efficiency and effectiveness of development funding. Based on Social Impact Bonds in industrialized countries, a DIB creates a contract between private investors and donors or governments who have agreed upon a shared development goal. The investors pay in advance for interventions to reach the goals and are remunerated if the interventions succeed. Returns on the investment are linked to verified progress.