Multilateral development banks (MDBs) said they are working to establish a joint fund designed to attract greater private investment into developing economies, with the heads of 10 institutions reporting progress in a joint statement issued after their meeting in Manila on Oct. 17.

According to the statement, the officials moved toward launching the fund after consulting leading global asset managers to gauge demand for a diversified portfolio of assets originated by development banks. The proposed vehicle falls under the banks' "originate-to-distribute/share" initiative, which seeks to give institutional investors greater access to such assets and, in turn, draw more private financing into development lending. For the banks, distributing existing loans to outside investors frees balance-sheet room for new lending, while giving investors a route into development assets that have historically stayed on the institutions' own books.

The meeting was held at the Manila headquarters of the Asian Development Bank (ADB), where the officials discussed ways to expand financing for developing countries confronting conflicts, disasters, economic challenges and limited fiscal space. The push to widen the pool of private capital speaks directly to those constraints, broadening the funding base for development beyond the banks' own resources.

The banks also cited capital adequacy reforms and financial innovations implemented since 2023 that have expanded their combined lending capacity by $792 billion over the next decade. They further welcomed the adoption of an updated method for measuring private capital mobilization, with reporting under the new framework set to begin in 2027. Because the method will be shared across the group, it is intended to give a like-for-like view of how much private capital the institutions mobilize.

In addition, the officials called for expanded local-currency financing and measures to address foreign-exchange risk, aiming to reduce currency mismatches and develop domestic financial markets in emerging economies. Currency mismatches arise when borrowers earn and spend in their home currency but repay debt in foreign currencies, leaving them exposed when exchange rates move. The officials also stressed the importance of maintaining highly concessional financing — lending on below-market terms — for the poorest and most vulnerable countries.

Beyond financing reforms, the discussions covered cooperation on critical minerals, climate, water, artificial intelligence and nuclear energy. The banks also reported ongoing efforts to align their policies and procedures to avoid duplication and make joint financing easier for borrowing countries — a change that, for governments seeking co-financing from several institutions at once, would mean working through a common set of requirements rather than parallel ones.

The European Investment Bank is set to chair the MDB Heads Group in 2027, taking over from the ADB, which led the group this year under President Masato Kanda. The year now carries two markers for the group: the chairmanship handover and the first reporting cycle under the new private-capital measurement framework.

The joint statement was issued by the heads of the African Development Bank Group, the Asian Development Bank, the Asian Infrastructure Investment Bank, the Council of Europe Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank Group, the Inter-American Development Bank Group, the Islamic Development Bank, the New Development Bank and the World Bank Group.

Source: BusinessWorld Online — Justine Irish D. Tabile