World Bank received $11 billion fund for new financial instruments

Business Sunday 21/April/2024 08:02 AM
World Bank received $11 billion fund for new financial instruments

Washington: The World Bank has received endorsements of $11 billion for the new financial instruments aimed at boosting lending capacity and addressing shared global challenges.

According to a release by the World Bank, eleven countries announced commitments totalling $11 billion for the Portfolio Guarantee Platform, hybrid capital mechanism, and new Liveable Planet Fund.

The World Bank Group's leveraging capability allows pledged resources to be multiplied six to eight times over 10 years, potentially reaching up to tenfold under certain conditions.

These pledged resources could provide up to $70 billion in urgently needed funds to tackle 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.

He further added "The generosity of these countries is an endorsement of the progress we have made to reform the Bank. And a sign of their shared commitment to development globally."

The eleven countries including, Belgium, France, Japan, and the United States have pledged to the Portfolio Guarantee Platform, while Denmark, Germany, Italy, Latvia, the Netherlands, Norway, and the United Kingdom committed to hybrid capital.

Japan also committed to provide the initial contribution to the new Liveable Planet Fund. The mutual contribution by countries highlights the importance of international cooperation in addressing environmental challenges.

The World Bank Group has implemented a series of reforms and developed innovative financial instruments as part of the Capital Adequacy Framework review, recommended by the G20 Expert Group. These reforms include adjusting the loan-to-equity ratio, increasing bilateral guarantee limits, maximizing callable capital benefits, introducing hybrid capital, and developing the Portfolio Guarantee Platform and Liveable Planet Fund.

Additionally, the World Bank Group has taken steps to develop IBRD 50-year loans at no additional cost for borrowers and reduce interest rates for projects addressing global challenges, partially funded through the Liveable Planet Fund.