Bridging the Gap: The Role of Multilateral Development Banks in Latin America’s Mixed-Migration Response

Executive Summary

The scale of displacement across Latin America and the Caribbean (LAC) has grown rapidly in recent years. Individuals from a wide range of nationalities—including Venezuelans, Nicaraguans, Haitians, Hondurans, and Salvadorians—are moving across borders in search of protection, stability, and economic opportunities. This includes more than 21.5 million forcibly displaced individuals in 2022. Host countries face immense challenges integrating migrants and refugees into their economies and systems. Yet, financial support for mixed-migration response in the region remains limited. Regional response platforms are chronically underfunded, and the United States—historically, the region’s largest donor—suspended most migration-related aid earlier in 2025, pushing the response to the brink of collapse. 

Against this backdrop, multilateral development banks (MDBs)—particularly the Inter-American Development Bank (IDB) and the World Bank—have become central players in sustaining the regional response. These institutions use trust funds and concessional facilities, like the Global Concessional Financing Facility (GCFF) and the IDB’s Grant Facility (GRF), to provide millions of dollars in grants and loans to support LAC countries hosting large numbers of migrants or refugees. Their goal is to catalyze long-term development outcomes for migrants and hosts. Between 2018 and mid-2024, MDBs disbursed more than $6.8 billion in migration-related financing across the Americas. For comparison, US contributions to the Venezuelan displacement response through the State Department and USAID amounted to roughly $2.8 billion between 2017 and 2023. 

MDBs can play a differentiated role in helping to mitigate the impact of the aid cuts, while also improving the sustainability of the host country’s response. They finance large-scale investments that support migrant integration while simultaneously strengthening national systems. Their support is helping host governments to regularize and integrate displaced populations, expand access to national systems, and strengthen institutional frameworks. MDBs are also well positioned to deliver coordinated, multisectoral interventions, leverage policy change, foster whole-of-government engagement, build state capacity, and generate the analysis needed to guide future reforms. In Colombia, for instance, MDB financing catalyzed the implementation of major reforms such as the Temporary Protection Statute (TPS), which regularized over 1.9 million Venezuelans, granting access to public services and the labor market.

However, MDBs cannot replace the critical functions of bilateral aid or humanitarian assistance. Their operating model—centered on channeling funds through state institutions—depends on host government leadership and political will. Without it, MDBs cannot initiate or sustain migration-related programming. In some cases, their dependency on host governments raises tensions between what governments prioritize and what is required to achieve meaningful migrant inclusion. Moreover, MDBs’ guidelines for migration investments are not always publicly accessible or developed in coordination with humanitarian actors, limiting visibility into their priorities and impact. Coordination with humanitarian actors remains limited, and engagement with refugee- and migrant-led organizations is minimal.

Furthermore, the aid cuts have also affected MDBs’ ability to offer concessional financing. Instruments like the GCFF are dependent on donor contributions, which have not been renewed—crippling their ability to provide grant support. Access to concessional support—including grants and highly subsidized loans—is critical for MDBs to provide migration financing, because migration is often politically contentious, and many governments are reluctant or unable to assume additional debt to support noncitizen populations. As donor support declines, so too does the MDB’s capacity to offer concessional terms in the region. This is particularly consequential for the World Bank, which lacks a dedicated concessional financing mechanism for middle-income countries responding to migration. Instead, it relies on donor-funded trust funds, like the GCFF, to subsidize operations. Within this constrained landscape, MDB’s migration-related operations must compete for scarce and unpredictable resources.

Without reliable concessional funding, MDB support risks becoming fragmented and opportunistic, constraining its ability to drive sustained policy reform. Yet the types of reforms needed—such as regularization, access to services, and economic inclusion—are inherently multisectoral and require long-term financial commitments, not one-off interventions. In this context, MDBs must ensure that limited migration-dedicated resources are used strategically, prioritizing investments that create enabling environments for migrant inclusion. This includes advancing both de jure and de facto access to rights and services to promote self-reliance and inclusive growth.

Currently, MDB investments in economic inclusion—such as access to jobs, credential recognition, and financial services—remain limited, despite their centrality to long-term outcomes. While both the World Bank and the IDB have successfully invested in improving the regularization of migrants in the region, these projects have been geographically concentrated in Colombia and Ecuador, likely due to political barriers. Moreover, MDBs allocate some migration-specific resources to projects that only tangentially benefit migrants—particularly infrastructure or host community initiatives that could be supported through broader development funding. Despite these challenges, one of the clearest areas of MDB added value is in supporting access to national public services. Through their financing, MDBs help ensure that forcibly displaced populations can access healthcare, education, and social protection alongside nationals. This reduces the reliance on parallel humanitarian systems, which are often temporary, focused on short-term relief, and dependent on donor contributions. Yet, more can be done to ensure de facto access to such services. 

MDBs are well positioned to drive long-term solutions, but their migration-related investments must be more strategic, coordinated, and rooted in inclusive development. At a time when aid is retracting and needs are growing, MDB financing must not only fill gaps—it must also ensure a direct impact on migrants and refugees that effectively drives economic inclusion and self-reliance. Strengthening MDB engagement requires new tools, improved safeguards, and a shift in approach that centers affected communities and prioritizes long-term, systems-based inclusion.

Recommendations

To the World Bank, IDB, and the GCFF:

1. Adjust and create financing tools to provide concessional finance for LAC nations responding to mixed–migration movements. Specifically, the World Bank should establish a dedicated concessional mechanism to finance mixed-migration responses for middle-income countries in the Americas, similar to the Window for Host Communities and Refugees. In addition, the World Bank and the GCFF should adopt similar eligibility criteria to the IDB’s GRF to finance migration response overall—including refugees, economic migrants, and migrant returnees, among other mixed-migrant movements in the Americas.
2. Ensure the provision of coordinated, multiphased investments for host countries with welcoming policies toward migrants, to support improved regulatory environments and governance, service provision, and economic opportunities. MDBs should prioritize funding for host countries with an enabling policy environment toward migrants, providing sustained levels of funding in different dimensions and a clear roadmap for investments over the years that lead to long-term inclusion. MDBs should avoid one-off investments, and ensure that host countries have clarity on the potential investment opportunities that lead to long-term solutions across years and sectors.
3. Include migrants, refugees, and other forcibly displaced populations as part of the safeguard and nondiscriminatory processes that MDBs require to implement projects, including the World Bank’s Environmental and Social Framework and the IDB’s Safeguard Framework. Including these groups would formally recognize them as vulnerable populations that cannot be discriminated against in any project implementation, would ensure that they are consulted during project design and implementation, and would prevent their exclusion from broader development projects not specifically focused on migration. It would also help mainstream migrant inclusion across investments and portfolios—funding host community projects, while safeguarding the limited migration-specific financing for dedicated, migration-targeted investments.
4. Scale up support for economic inclusion interventions, especially in host countries that already have proper governance and regulations. MDBs must ensure that the economic inclusion of migrants happens in practice so that host countries can reap the benefits linked to migrant integration. To that end, MDBs should scale up interventions in this dimension, prioritizing inclusive sectoral investments that expand access to jobs for migrants in areas where host countries experience labor shortages. Furthermore, MDBs should increase their investments in skills, professional recognition, and financial inclusion in collaboration with the private sector.
5. Prioritize financing migration governance frameworks early on, including intergovernmental coordinating structures to respond to migration and government planning tools. MDBs’ success depends on the host governments’ successful migrant response, which requires an effective governance and coordination framework across ministries, operations, and budgets. MDBs should invest in developing such governance frameworks early on, promoting interministerial dialogue and the inclusion of migrants in development plans. MDBs can provide policy and staff support for creating governance frameworks through technical cooperations, which are appealing to host governments due to their low risk and grant-based nature. Furthermore, MDBs should also utilize those frameworks to maintain government engagement beyond single projects and foster continuous dialogue and oversight.
6. Create clear guidelines—in consultation with humanitarian actors, migrants, and affected communities—to select migration investments based on long-term impact, and conduct publicly available project impact evaluations. These guidelines should clearly define the types of projects that can benefit from dedicated migration financing, with well-designed requirements and impact tracking tools to ensure that projects lead to broader structural change and long-term inclusion, such as those implemented by the GCFF. Alongside these guidelines, MDBs should conduct and publish independent impact evaluations that assess the impact of investments on migrants and refugees. These evaluations should consider input from humanitarian activities, civil society, refugee-led organizations, and affected communities.
7. Fund humanitarian organizations and refugee-led organizations to implement projects, especially in service delivery, when governments lack institutional capacity. In cases where governments lack institutional capacity or face legal constraints to providing services to migrants, MDBs can incentivize host governments to collaborate with humanitarian actors to implement projects—until the government can effectively take over. This means properly servicing the migrant population by incentivizing government collaboration with humanitarian organizations for the effective implementation of projects in the face of access and capability limitations. In response to humanitarian cuts, MDBs can incentivize governments to partner with humanitarian actors to temporarily provide shelter and other social services, which governments might not be readily able to provide due to legal and institutional constraints and capacity limitations.
8. Establish additional joint monitoring frameworks in collaboration with humanitarian actors, refugee-led organizations, and local actors that include creating a joint protocol to report human rights and protection violations that target migrants and refugees. MDBs should partner with humanitarian actors, especially refugees and refugee-led organizations, to monitor projects and government-led responses, ensuring that projects are adequately implemented and effectively impact affected communities. This includes defining a clear protocol for responding to serious violations of protection rights and other human rights abuses, to evaluate the continuation of projects and migration-related investments.

To Donors and MDB Board Member Countries:

1. The US government should reprioritize financing migration support for LAC, in the humanitarian sector in particular. The United States should step up its commitment to support the region in managing and integrating mixed-migration flows by continuing and expanding its support to humanitarian operations. The US Congress should continue to appropriate funding for FY26 to support migration and humanitarian assistance across LAC. Additionally, as part of the US Department of State’s reorganization plan, the administration should continue to prioritize humanitarian policy across LAC nations. The United States should also acknowledge the long-term consequences and implications of defunding the humanitarian response, and its impact on decreasing the effectiveness of development investments and long-term solutions. As such, the US government should renew its support to the Comprehensive Regional Protection and Solutions Framework (MIRPS), Response for Venezuela (R4V), and humanitarian agencies. 
2. Continue and expand support for MDB trust funds and concessional facilities, like the GCFF and the GRF, ensuring fair and equitable distribution of resources across regions. In particular, donors should provide support to the GCFF and GRF for new projects that benefit LAC and potential new projects in other countries in the region. Furthermore, donors should ensure that resources for global tools, like the GCFF, are not earmarked and that resources are consistently allocated in countries that have a good track record of response, with sustained financing for the Americas. 
3. MDB board member countries must push for accountability of investments in countries with protection violations. Through the board of directors, country donors can help keep host governments accountable and ensure that MDB investments are selective based on proper protection parameters, particularly in the case of mass rights violations. Board members should push MDBs to establish protection-based criteria for migration investments, and also call for clearly defined “red lines” for investments.

To Humanitarian Organizations and Affected Communities:

1. Keep governments accountable on protection and human rights violations, calling for MDBs and other donors to withdraw support in severe cases. As MDBs are not protection-based institutions, it is up to humanitarian organizations to safeguard a protection-based agenda and push development banks to hold governments accountable, especially in the face of severe violations. Therefore, humanitarian actors should report to MDBs cases where governments are violating migrant rights—especially if such violations are within the confines of MDB investments. Furthermore, humanitarians must demand that MDBs and board members withdraw support in severe cases like widespread refoulement or atrocities. Humanitarians must clearly define protection-based criteria for MDBs to follow, and sound the alarm in cases where MDBs are indirectly complicit with government violations. 
2. Establish shared indicators in collaboration with MDBs for the humanitarian coordinating structures. Humanitarian actors, through their coordinating structures like R4V and MIRPS, should collaborate with MDBs to establish shared indicators, especially in the country chapters. These indicators should not only acknowledge the different operational models, but should also clearly define parameters for the way progress is reported and captured across institutions. 
3. Improve understanding of the MDBs’ role in the response and how they operate, including development liaisons being put in charge of coordinating with MDBs. Currently, organizations like the United Nations High Commissioner for Refugees (UNHCR) have development officers in the countries who are in charge of coordinating the response with MDBs. This is a best practice that other organizations should consider implementing, because a good understanding of MDBs is key to a successful response.

Acknowledgments

The authors would like to thank the many individuals from multilateral development banks, international organizations, and government agencies who generously gave their time to participate in interviews and share insights that shaped this research. We are especially grateful to Lucas Gómez and Karen Marriner for their contributions to the research design and interview process, and to Mariam Cosmos for her dedicated research assistance. We also thank the team at Refugees International for their support throughout the development and publication of this work. Finally, we are grateful to the IKEA Foundation and the Conrad N. Hilton Foundation for their generous financial support.