A healthy Public Development Bank (PBD) is one that finds a financially sustainable way to effectively balance the needs of its stakeholders—including shareholders (governments), clients, private sector intermediaries and taxpayers—while accomplishing its public policy objective. Due to the variety of mandates and business models used by PDBs, there is no one definition of what constitutes perfect health for a PDB. All PDBs operate within unique political, social and economic national contexts. Nonetheless, there are common parameters and features to their overall systems that can be compared against a common but flexible and comprehensive framework.
Momentus (formerly IFCL) was commissioned by the Inter-American Development Bank (IDB) to research and develop a conceptual framework of best practices to assess the health and performance of PBDs. The result of our work is the Health Diagnostic Tool (HDT).
The HDT defines, in normative terms, what good PDB health looks like across various dimensions, allowing each PDB to determine how it can best improve its overall performance. The tool helps define a strategy for PDBs to achieve their financial and developmental goals. To develop the HDT, we provided a general background review of literature on the role of PDBs in the financial system, developed a benchmark and indicator of best practices in the region, and incorporated feedback and lessons learned from other PDBs.