SDG 9: Industry, Innovation, and Infrastructure | SDG 17: Partnerships for the Goals
Ministry of Finance
The Asian Development Bank (ADB) and the World Bank Group announced the operationalization of the Full Mutual Reliance Framework (FMRF), an innovative cofinancing model designed to simplify, accelerate, and enhance the effectiveness of development finance. This pioneering agreement, which responds directly to client country needs and G20 calls for MDBs to work more cohesively, allows countries to work with a single “Lead Lender” for co-financed projects.
Key Features and Benefits of the FMRF:
Single Policy Framework: The FMRF allows projects to be guided by the operational policies and procedures of the Lead Lender only, eliminating duplication between the two institutions on matters like project design, preparation, supervision, and evaluation.
Borrower Benefits: This streamlining is expected to result in faster project implementation, lower transaction costs, and simplified engagement for borrowing countries.
Scope: The framework was initially signed in February 2025 and will apply to selected public sector projects during a four-year initial phase.
First Projects Announced (Pacific Focus):
Health (Fiji): The World Bank-led Pacific Healthy Islands Transformation (PHIT) project ($236.5 million) aims to modernize primary health-care networks and support a new regional hospital to tackle noncommunicable diseases (NCDs).
Resilience (Tonga): The ADB-led Tonga Sustainable Economic Corridors and Urban Resilience (SECURE) project (combined $120 million in grant financing) will upgrade the transport network and urban drainage systems to improve market access and enhance secure evacuation routes during disaster events.
Policy Relevance for India
The FMRF serves as a vital model for institutional reform within the multilateral development bank system, a priority India has championed through the G20. India, as a major ADB borrower, should advocate for the rapid expansion of the FMRF beyond its pilot phase and the Pacific to South Asia. Adoption of this single-policy model could significantly reduce bureaucratic friction, cut transaction costs, and speed up the delivery of large-scale infrastructure and social projects (e.g., in transport, energy, and climate) financed jointly by the ADB and the World Bank in India.
What is the Full Mutual Reliance Framework (FMRF)?→ The FMRF is a groundbreaking co-financing model and the first of its kind between major Multilateral Development Banks (MDBs). It establishes that for jointly funded projects, one institution (ADB or World Bank) serves as the designated Lead Lender, whose single set of policies will govern all aspects of the project lifecycle. This is possible due to the established “substantial alignment” between the two institutions’ policies, reducing the bureaucratic burden on borrower countries.
Relevant Question for Policy Stakeholders: How can India, through its representation at the ADB and World Bank Boards, push for the accelerated expansion of the FMRF to South Asia to simplify project implementation and reduce its transaction costs?
Follow the full news here: Asian Development Bank and the World Bank Group Announce Pacific Projects as First Proposed Under Groundbreaking Partnership Initiative