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As a direct result of a growing cleavage between the discourse on development finance and the evolution of the International Financial Architecture reform process, many financial institutions in the OECD economies have begun to exclude critical sectors from their financing mix. For instance, the Export Import Bank of the United States voted in 2013 to shift its funding out of coal plants. Such disruptive policy shifts are not new. But multilateral and bilateral institutions must take into account the domestic context of recipient economies when making policy.Denying developing countries the opportunity to transition from inefficient, coal-based power to cleaner, coal-based generation technologies is suboptimal in terms of sustainable development. An excessive focus on prudential norms by its members will not allow the NDB to fulfil its mandate as a catalyst for infrastructure and sustainable development financing. In order to harness multiplier affects through a diversified financing portfolio, the ethos of the bank should be imaginative and not fiscally restrictive. It should be clear that this is not an advocacy of profligate spending.The Chinese Development Bank experience is instructive. After initial problems with repayments, it has achieved financial stability without reducing its developmental imprint. The Brazilian Development Bank (BNDES) has also offered concessionary finance in a sustainable fashion. Developmental finance needs to consider the social returns and devise prudential norms accordingly. This will require political support. The NDB's pool of funds will not be large enough to enable a development transition on its own. It will have to look to play the role of an exemplar in the evolving multilateral financing space by optimally leveraging mobilised resources. The NDB is well placed to harness the core competency available within BRICS countries, of being familiar with other emerging and developing countries. Moreover, the NDB may consider giving preference to developing countries other than those within the BRICS itself in terms of direction of project financing flows.
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