The World Bank has garnered over $11 billion in funding from 11 countries to increase the bank’s financial power by around $70 billion over the coming decade. The funds are designated for critical global issues, including climate change and pandemics, marking a pivotal step towards tackling these challenges head-on.
The announcement came during the spring meetings of the World Bank and the International Monetary Fund in Washington. It represents the largest expansion of the World Bank’s balance sheet since its strategic overhaul last year, when the institution broadened its mission to include objectives beyond poverty alleviation.
NEWS | 11 countries pledge $11 billion to boost new financial instruments at #WBGMeetings.
These resources could generate up to $70 billion over 10 years, crucial for addressing cross-border challenges and advancing development goals. https://t.co/KI4qHvne7d pic.twitter.com/NbATzSJ5uL
— World Bank (@WorldBank) April 19, 2024
In April of last year, the World Bank’s shareholders approved an adjustment to its leverage ratio. This adjustment is expected to enhance its lending capacity by about $40 billion over the next decade. Additionally, an increase in bilateral guarantees will allow for an extra $10 billion in financing within the same period.
Nations such as Belgium, France, Japan, and the United States have pledged their support for the bank’s expanded portfolio guarantee program. Meanwhile, the United Kingdom, Denmark, Germany, Italy, Latvia, the Netherlands, and Norway have committed funding towards the hybrid capital mechanism, a debt-like instrument designed to strengthen the bank’s lending capabilities.
Japan has taken the lead as the first contributor to the new “Livable Planet Fund.” This initiative aims to combine funds from governments, philanthropic organizations, and the private sector to support various projects, from energy transition to healthcare delivery systems, aligning with the World Bank’s mission to combat poverty and ensure sustainability.
German Development Minister Svenja Schulze emphasized the importance of expanding the bank’s lending capacity, noting the growing demand for financial resources in impoverished nations. She also pointed out that the World Bank’s reform efforts must continue to address escalating global challenges effectively.
The $11 billion funding of World Bank marks a crucial development in international economic governance. It demonstrates a global commitment to confronting pressing issues that go beyond national borders, focusing on sustainability and resilience, and heralds a new era of international cooperation against global crises.
Image Source: Rural 21