‘Blend’ Countries Pay Billions Extra as Access to Cheap Multilateral Loans Narrows
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Developing nations are paying tens of billions of dollars extra to fund infrastructure, education and health projects because they do not have enough access to affordable loans from multilateral development banks, according to a report released on Tuesday. The study was published by ONE Data and The Rockefeller Foundation.
The report said the biggest pressure is on the 10 so-called “blend” countries, including Kenya, Ghana, Senegal and Bangladesh, which sit between the poorest nations and wealthier developing economies. It found that these countries could have saved up to $20.8 billion between 2020 and 2024 if they had financed $40.6 billion in sovereign bond issuance through cheaper MDB lending windows.
Instead, the countries borrow at much higher rates in international bond markets, while concessional lending remains limited in both volume and flexibility. The report said rising borrowing costs are eroding governments’ ability to fund healthcare and social protection, while many borrowers still use bond markets to preserve creditworthiness and market access.
The study also said inefficiencies inside MDBs are making the problem worse, with a survey of 650 government and bank officials across 125 countries showing that more than 80% want predictable and flexible finance, but only about two-thirds believe development banks deliver it effectively. It warned that donor aid cuts, especially from North America and Europe, are putting extra pressure on the World Bank’s International Development Association.
The report recommended expanding MDB lending capacity, speeding up loan processes and protecting IDA funding. It said the G20’s Capital Adequacy Framework could unlock $300 billion to $400 billion in new lending headroom, while recent S&P announcements could free up another $600 billion to $800 billion without new shareholder contributions.
