Experts have called for urgent reforms to the global multilateral development finance system, warning that declining aid, geopolitical fragmentation, and shrinking concessional resources pose significant challenges for South Asian countries, including Bangladesh. The call came during a virtual discussion titled 'OECD Multilateral Development Finance 2026 Report (MDFR): Perspectives from South Asia', jointly organised by the Centre for Policy Dialogue (CPD) and the Organisation for Economic Co-operation and Development (OECD).
Declining Aid and Geopolitical Fragmentation
The discussion highlighted the pressing need for reforms due to declining aid and increasing geopolitical fragmentation. Dr Rashed Al Mahmud Titumir, adviser on Finance and Planning to the Prime Minister, emphasized that the report should be viewed as a call to rethink how development will be financed in the coming decades. He noted that Bangladesh is pursuing a diversified financing strategy through stronger domestic resource mobilisation, capital market reforms, bond market development, and increased private investment.
Challenges Ahead for Bangladesh
Dr Fahmida Khatun, Executive Director of CPD, pointed out that the report comes at a critical time as the global development finance system is undergoing a historic transformation. She noted that while Bangladesh has benefited substantially from development finance in infrastructure, health, education, and social sectors, changing global financing trends could create fresh challenges ahead of its graduation from the Least Developed Country (LDC) category.
Need for Bold Reforms
Henri-Bernard Solignac-Lecomte, Senior Economist and Head of Unit at the OECD, stressed that preserving and renewing the multilateral development finance system would require bold reforms. Presenting the report, Leonardo Altieri noted that multilateral development finance is entering a new phase marked by shrinking resources, with contributions expected to decline significantly over the coming years.
Emerging Financial Strain
Marius Gu,rin, another OECD expert, highlighted that although multilateral outflows reached nearly $300 billion in 2024, early signs of financial strain are emerging, particularly in concessional financing for poorer countries. Experts from Pakistan, Nepal, and Sri Lanka stressed the need to safeguard concessional financing, strengthen climate finance, and reform eligibility criteria to better reflect climate vulnerability, debt sustainability, and development needs rather than relying solely on income levels.
Call for Stronger Commitments
Shah Asif Rahman, Director General of the Multilateral Economic Affairs Wing at Bangladesh's Ministry of Foreign Affairs, called for stronger commitments from developed countries and international financial institutions to support the implementation of the Sustainable Development Goals, climate action, and Bangladesh's smooth LDC graduation. The discussion concluded that South Asian countries should play a more active role in shaping reforms of the global multilateral development finance architecture while strengthening domestic resource mobilisation and ensuring continued access to affordable and predictable development finance.
