The World Bank on Friday said that 11 countries have pledged to contribute over $11 billion to new hybrid capital and portfolio guarantee instruments designed to expand the bank’s financing capacity by $70 billion over a decade to tackle climate change, pandemics and other global challenges.
The voluntary contributions, announced at World Bank and
International Monetary Fund spring meetings in Washington, form the largest
single enhancement to the World Bank’s balance sheet since the U.S. and other
shareholders expanded its mission beyond fighting poverty in 2022.
In April 2023, World Bank shareholders endorsed an increase
in the bank’s leverage ratio to boost lending capacity by some $40 billion over
10 years. It also implemented an increase in bilateral guarantees that unlocks
another $10 billion in financing over a decade.
Thus far, the World Bank said Belgium, France, Japan and the
United States have pledged funds to the enhanced portfolio guarantee program,
while Britain, Denmark, Germany, Italy, Latvia, the Netherlands, and Norway
will contribute to the mechanism for hybrid capital, a debt-like instrument
that can be used to back lending.
In addition, Japan is the first contributor to a new
“Livable Planet Fund” designed to capture contributions from governments,
philanthropies and the private sector to help finance projects from energy
transition investments to healthcare delivery.
The fund is named after the bank’s new, expanded mission
statement, “to create a world free of poverty on a livable planet,” endorsed
last year to partly reflect its climate finance role.
German Development Minister Svenja Schulze, who first broke
the news of the contribution pledges, said that further expansion of the bank’s
lending capacity were needed because the needs of poor countries would continue
to grow.
The World Bank’s “reform will not stop here,” she told
reporters.