A group of 11 countries announced commitments to new financial instruments to bolster the World Bank Group’s lending capacity and ability to tackle global challenges. The commitments, totalling $11 billion, encompass the Portfolio Guarantee Platform, hybrid capital mechanism, and the newly established Livable Planet Fund.
With the World Bank Group’s leveraging capability, these pledged resources could be multiplied six to eight times over ten years, potentially reaching tenfold under certain conditions, state news agency WAM reported on Sunday. This infusion of funds, totalling up to $70 billion, is poised to address urgent cross-border challenges and advance development goals.
“We worked hard to develop these new financial instruments that boost our lending capacity, multiply donor funds, and ultimately allow us to improve the lives of more people,” said Ajay Banga, president of the World Bank Group. “The generosity of these countries is both an endorsement of the progress we have made to reform the Bank and a sign of their shared commitment to development globally.”
Belgium, France, Japan, and the US pledged to the Portfolio Guarantee Platform, while Denmark, Germany, Italy, Latvia, the Netherlands, Norway, and the UK committed to hybrid capital.
Japan is committed to making its first contribution to the new Livable Planet Fund.
These commitments come as part of a series of reforms the World Bank Group implemented under the Capital Adequacy Framework review, recommended by the G20 Expert Group. These reforms include adjustments to the loan-to-equity ratio, increasing bilateral guarantee limits, and introducing hybrid capital and the Portfolio Guarantee Platform.
Furthermore, the World Bank Group has taken additional steps to develop IBRD 50-year loans at no extra cost for borrowers, focusing on projects with cross-border benefits. Additionally, a system has been created to reduce interest rates for projects addressing global challenges, with partial funding from the Livable Planet Fund.
