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10/12/2023 10:00 AM


Strengthening Domestic Financial Resource Mobilisation in Times of Polycrisis

Event Information

The polycrisis is widening the SDG and climate finance gap. The annual funding shortfall in developing countries grew from USD 2.5 trillion before the pandemic to USD 3.9 trillion. Yet, developing countries’ access to international sources of capital is more challenging than ever. It becomes increasingly clear that the Agenda 2030 cannot be met without strengthening domestic SDG and climate financing.

Channelling more domestic savings into domestic investment holds substantial potential for efficiency gains. Currently, significant amounts of domestic savings are invested abroad – often at low or negative returns – in safe, hard-currency assets, instead of the local economy.

Public Development Banks (PDBs) in developing countries can assume a key role in mobilising domestic savings and channelling them into domestic investment. Domestic PDBs have specific comparative advantages over internationally operating counterparts, including the provision of local currency finance as well as their proximity to local markets and embeddedness in the national context.

This role can especially be enhanced with support from Multilateral Development Banks (MDBs) and the development finance institutions (DFIs) of advanced countries. MDBs/DFIs have a wealth of experience in delivering technical assistance projects and capacity building for banking and financial management. Building on this, they can help PDBs to build expertise in financing green infrastructure and projects.

Against this backdrop, this side event will discuss the role of NDBs, MDBs and DFIs in mobilising private capital, and the support that MDBs and DFIs can provide to NDBs so that they can assume a greater role in financing just transitions.