Good Practices for National Development Bank : Guidance Note for the Western Balkans

Overview & Synopsis

National Development Banks (NDBs) are specialized financial institutions established with a public policy-oriented mandate to fill financing gaps in new or strategic sectors and support economic and social development. Their development-oriented mandate, long-term liabilities, and ability to borrow from international markets are key features enabling them to provide long-term, affordable capital. NDBs are typically owned by national governments or state-owned enterprises (SOEs), which hold all or most of the shares. The shares not held by the government are usually owned by development partners and, in some cases, private firms. There are very few privately owned NDBs. This note outlines strategies and frameworks for the effective operation of National Development Banks (NDBs). The note emphasizes the critical role these institutions can play in addressing financing gaps and supporting economic development when aligned with international best practices. These best practices include a clear mandate, sound corporate governance, appropriate instruments and funding structures, robust risk management, and strong legal and regulatory frameworks.