World Bank may loosen loan ratio to relieve $4bln a year

The World Bank may change its lending guidelines to free up $4 billion in lending capacity each year to help developing countries cope with climate change, its President David Malpass told Reuters on Thursday.

The bank’s International Bank for Reconstruction and Development (IBRD) arm may lower its equity-to-lending ratio by one percentage point to 19 percent, Malpass added.

This may taking on a bit more risk, in line with an independent report prepared for the Group of 20 major economies last year.

Malpass further mentioned that lowering the equity-to-lending ratio would free up more resources at a time of mounting global challenges such as the Ukraine war.

The IBRD raised its sustainable annual lending limit by $2 billion in December, beginning in fiscal 2024, and Malpass said there could be scope for a further 8 percent expansion in total IBRD lending.

Noteworthy, that Malpass has announced his resignation from the bank on Wednesday amid mounting pressure from the U.S. Treasury to move faster on reforming the bank.