Indirect Responsibility in Development Lending: Do Multilateral Banks Have an Obligation to Monitor Project Loans?

Abstract

Multilateral Development Banks ("MDBs") are created with the aim of financing economic development in developing countries. Aside from general loans for states' development, they also finance-usually on a reimbursement basis-large-scale projects like dams and highways, which often have dramatic impact on hundreds of thousands of inhabitants. Responsibility for providing fair solutions to these people belongs to borrowing states. Lenders are insulated from responsibility in the international sphere since they have no physical presence at the place of the alleged harm. As stated by an academic, "[t]he people may have a terrible problem, but the Bank may not be responsible."