In March 2026, Development Reimagined submitted a formal response to Moody’s Request for Comment on its proposed methodology update for Multilateral Development Banks (MDBs) and supranational entities, arguing that the framework systematically misprices African risk and misunderstands the institutional realities of African-led development finance institutions.
The submission comes amid growing international scrutiny of sovereign credit ratings and multilateral financing frameworks, including concerns recently highlighted in a Devex analysis by Development Reimagined, examining whether global ratings methodologies remain anchored in outdated assumptions inherited from the post-war Bretton Woods system.
At the centre of Development Reimagined’s intervention is a core argument: that Moody’s proposed framework applies commercial banking logic to institutions that were never designed to operate like commercial banks.
“MDBs exist to pool risk, not optimise against it,” the submission argues.
The proposed methodology introduces a new MFI Adjusted Capital (MAC) Ratio based heavily on Basel commercial banking standards. Development Reimagined contends that this approach penalises the very institutions mandated to lend counter-cyclically into frontier and fragile markets — especially African regional and sub-regional development banks.
Under the proposed framework, institutions serving low-rated African sovereigns would automatically attract the highest capital charges, regardless of their actual repayment experience or institutional structure. The response notes that most African sovereigns fall into the B-category rating spectrum or remain unrated altogether, creating a structural disadvantage for African-focused MDBs from the outset.
The submission further argues that Moody’s methodology double-counts risk through its proposed “Operating Environment” overlay, which applies additional downward adjustments even though macroeconomic and political conditions are already embedded within sovereign ratings used for MAC Ratio calculations.
Importantly, Development Reimagined challenges the underlying empirical assumptions informing the methodology. While some commentators have cited African sovereign defaults as justification for higher risk calibration, the response points to a different reality: African sovereigns have overwhelmingly continued servicing obligations to regional MDBs even during periods of severe commercial debt distress.
The distinction matters because MDB repayment behaviour differs fundamentally from commercial sovereign debt behaviour. African regional MDBs are jointly owned by the same member states that borrow from them, creating political and institutional incentives that commercial lenders do not possess.
The submission also critiques the methodology’s treatment of portfolio concentration. Many African sub-regional development banks serve a limited geographic constituency by treaty design, not by strategic overexposure. Yet the proposed framework treats this mandate-driven concentration in the same way it would treat poor risk management in a globally diversified institution.
On preferred creditor status (PCS), Development Reimagined argues that Moody’s conflates legal status with actual repayment treatment and gives disproportionate analytical weight to informal Paris Club conventions while undervaluing legally binding treaty protections embedded in the founding agreements of many African and post-Bretton Woods institutions.
The response further questions the methodology’s heavy reliance on callable capital as the principal indicator of shareholder support. Callable capital has never been activated in the history of MDBs. By contrast, African shareholders have repeatedly injected real paid-in capital into regional institutions during periods of crisis — including through the COVID-19 period and recent debt distress episodes.
According to Development Reimagined, this reveals a broader methodological problem: the privileging of theoretical support mechanisms associated with legacy Bretton Woods institutions over demonstrated support behaviour observed in African-led institutions.
The submission also criticises what it describes as a “Eurobond-centric” understanding of funding diversification. Institutions that have successfully diversified funding across South-South capital markets, regional markets, bilateral facilities, and non-Western investor bases are often scored lower because they do not conform to traditional Western capital market benchmarks.
More broadly, the response frames the debate as part of a larger question about the future architecture of global development finance.
African-led development banks, hybrid institutions, and post-Bretton Woods financial institutions now play a growing role in financing infrastructure, industrialisation, and structural transformation across the Global South. Yet many of the methodologies used to assess them remain calibrated around institutional models designed in 1944 for a very different geopolitical and financial order.
Development Reimagined argues that ratings methodologies are not merely technical instruments. They shape borrowing costs, capital access, development space, and the strategic capacity of countries and institutions to finance transformation.
“When assumptions derived from one class of institution are applied universally,” the submission concludes, “the result is a framework that cannot see the strengths it was not designed to find.”
The full submission calls for a more evidence-based, globally representative methodology that recognises the institutional diversity of modern multilateral finance and incorporates the demonstrated repayment performance, governance structures, and funding realities of African-led MDBs.
Read Development Reimagined’s full response below.
