World Bank to Lend Poor Countries with $70 Bln

The World Bank, which works to support development, announced that funding commitments from several countries, including Germany, will increase the size of World Bank loans by an additional $70 billion over the next decade.

World Bank President, Ajay Banga, emphasized that they've worked hard to develop these new financing tools to enhance their lending capacity, multiplying donor funds to ultimately improve the lives of more people.

Germany has already pledged €305 million ($325 million) in the form of hybrid capital during the G20 Summit held in New Delhi last year. More than 10 countries have joined, pledging a total of $11 billion in guarantees and hybrid capital.

Hybrid capital is a special type of bond through which the World Bank can raise more funds in the market. The World Bank now expects, in addition to commitments to provide hybrid capital and guarantees, to provide up to an additional $70 billion in loans.

In addition to Germany, the United States, France, Japan, and Italy are among the countries supporting the initiative with commitments to provide hybrid capital.

German Development Minister, Svenja Schulze, stated that together, they've succeeded in building a better bank over the past 18 months.

Today, they take a big step forward, making it a bigger bank. She noted that she had campaigned to push other countries to follow Germany's lead, and now this has succeeded.

Schulze added that the $70 billion is a significant amount, and as part of the World Bank's reform, it was important to expand the bank by generating additional funds.

It's worth noting that the World Bank lends money to poor countries on preferential terms, aiming to boost their economies and reduce poverty. This institution is supported by 189 countries worldwide.

However, the issue of global debt is currently one of the biggest challenges facing the global economy, reaching record levels due to increased borrowing, posing a huge burden on both countries and individuals alike.

With global public debt rising slightly to 93 percent of gross domestic product (GDP) in 2023, an increase of about 9 percentage points from its level before the COVID-19 pandemic, the International Monetary Fund (IMF) places addressing global debt at the top of its priorities.

This issue has received significant attention during the ongoing spring meetings in Washington.

In this context, the IMF, World Bank, and Brazil, the current chair of the G20, said on Wednesday that there has been significant progress in global debt issues in recent months, citing new agreements on required timetables and fair treatment of stakeholders.

IMF Managing Director Kristalina Georgieva, World Bank President Ajay Banga, and Brazilian Finance Minister Fernando Haddad issued a joint statement after a ministerial-level meeting of the Global Sovereign Debt Roundtable (GSDR), which brings together debtor countries, creditors, international financial institutions, and the private sector, to spur debt restructuring efforts that have long been stalled and build a greater understanding of ways to address challenges, on the sidelines of the IMF and World Bank spring meetings, according to Reuters.