Multilateral development banks, new developmentalism and local currency financing

Cinthia Bechelaine e Luiz Carlos Bresser-Pereira

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Multilateral Development Banks (MDBs) are designed to finance investments to promote global economic and social development. The objective of this paper is to discuss a key component to meet the demand for investment from developing countries, which is the ability of MDBs to provide loans in local currency rather than in foreign currency. To explain how these institutions fulfill this purpose, we distinguish "traditional" from "new" MDBs, discuss the problems generated from foreign currency indebtedness and explore a way out, or an alternative explanation, based on New Developmentalism theory and local currency financing challenge.

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