Second, the agreement is expected to scale development financing and impact. The MDBs must play a greater-than-ever role in facilitating cooperation, aligning incentives, and boosting broader integration among countries. As the COVID-19 pandemic made clear, tackling these challenges requires the provision of more and better regional and global public goods, and implicitly, smart alterations to the country-based approaches currently adopted by national governments and the MDBs’ lending models. In particular, the first two priorities exemplify the cross-border nature of today’s development challenges. Its three priorities-sustainable and inclusive development in the Amazon, climate resilience in the Caribbean, and digitalization, with special attention to education-focus on key areas of convergence between demand (client countries’ needs) and supply (donor interests, as well as World Bank and IDB product offerings). modern-day challenges” facing the world, consistent with those outlined by US Secretary of the Treasury Janet Yellen in April 2022 at the Atlantic Council. First, it reflects an up-to-date understanding of the “unmet. This agreement is a breakthrough for several reasons. At the signing ceremony in Washington DC, the leaders outlined three reasons for their collaboration: to elevate scale, improve impact, and join forces to meet increasingly complex challenges. In this context, the historic IDB-World Bank partnership agreement signed by IDB President Ilan Goldfajn and World Bank President Ajay Banga on August 31 is a significant step in the right direction. With development needs expanding and evolving across the region, development finance organizations-and multilateral development banks (MDBs) at large-have a challenge in finding how to work better in LAC. Their actions come as climate shocks and food insecurity have compounded structural economic vulnerabilities such as mediocre growth, inequality, and low productivity. That message is clearly resonating with the new heads of the World Bank and the Inter-American Development Bank (IDB)-two development institutions critical to LAC’s future prosperity-who are answering the call to find a new, more impactful way of doing business in the region. With Latin America and the Caribbean (LAC) currently projected to grow at just 1.9 percent this year and 2.2 percent next year, the lowest of any developing regions except war-battered Emerging and Developing Europe, a new playbook is urgently needed. Insanity, the saying goes, is doing the same thing over and over and expecting a different result. SeptemWhy the Inter-American Development Bank-World Bank deal matters, and what’s next
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