WBG unveils financial package to boost lending capacity

The World Bank Group announced a package of financial measures on Tuesday aimed at increasing its lending capacity and making loans more affordable, potentially generating over $150 billion in financing over the next decade.

Key measures include lowering the minimum Equity-to-Loans ratio from 19 to 18 per cent, expected to yield an additional $30 billion in financing. The World Bank also removed certain fees, simplifying the borrowing process and reducing costs for smaller countries most in need of assistance.

World Bank Group President Ajay Banga emphasised the significance of these measures: “These new financial measures will boost our lending capacity and enable us to drive meaningful change in the lives of people”

The new adjustments come with enhanced protections for the International Bank for Reconstruction and Development’s (IBRD) triple-A rating, including a robust credit rating monitoring system and contingency measures for financial stability during stress events.

Other changes to financing terms include a grace period for commitment fees on undisbursed balances, the removal of pre-payment premiums, discounted pricing for short-term loans, and extended low pricing for vulnerable states.

Additionally, the Bank introduced an Enhanced Callable Capital mechanism, allowing shareholders to leverage callable capital to support the Bank’s rating in critical times.

This package is part of ongoing reforms under the Capital Adequacy Framework, which aims to expand lending by $70 billion over the next decade, following recommendations from the G20 Expert Group.

Attribution: WBG

Subediting: Y.Yasser