World Bank Raises Lending Capacity by 50% to Offer Record $150 Billion Over Next Decade
NEW DELHI: In a move aimed at expanding its support for developing economies, the World Bank (WBG) has announced that it is increasing its lending capacity by 50%, positioning itself to offer a record $150 billion over the next decade. The multilateral development bank's new plan puts the institution in a strong position to address some of the world's most pressing challenges.
The WBG will be focusing on green projects, with a significant portion of the funds dedicated to initiatives such as climate resilience and rural development. India, the World Bank's largest client, is set to benefit from this increase, with new funds being directed towards critical sectors such as energy, healthcare, and digital education.
"India is the biggest client and will have a bigger share of funding available from the World Bank," Auguste Tano Kouames, World Bank Country Director for India, told Mint in an interview. "We expect to provide more support to the country, with a focus on projects that drive sustainable development."
As part of its efforts to optimize balance sheet and increase lending capacity, the WBG has approved measures such as waiving commitment fees on loan balances for middle-income countries like India, for four years. This reduction in annual borrowing costs will effectively save the country nearly 1% per annum.
"India is a critical partner in achieving our goals of sustainable development," Kouames said. "We believe that this new agreement with the World Bank will significantly enhance its capacity to drive growth and reduce poverty."
The WBG's recent balance sheet optimisation has also allowed it to increase its lending capacity, positioning itself for record levels of funding over the next decade.
"In a global economy where uncertainty is inherent, we must continually review our strategies to maximize our impact," Kouames said. "Our ability to provide financing without burdening member countries will enable us to tackle complex development challenges."
The World Bank Group's annual meetings have also focused on internal reforms and broader reforms across the multilateral development bank (MDB) landscape.
"The international community needs stronger MDBs to drive transformational change in developing countries," Kouames stated. "Our aim is to create a better bank, by which I mean being faster, collaborating better, mobilising financing with private sector partners, and getting closer to our clients' needs."
India's growth prospects have been forecasted to be 7% GDP in FY25, according to the World Bank. This growth is seen as driven by private investment, as consumer confidence improves.
"We expect a pickup in private investment over the coming quarters," Kouames said. However, there was caution raised about rising interest rates which could impact global supply chains and manufacturing businesses.
According to the Global Development Finance (GDF) 2023 report the world needs $240 billion in private capital annually by 2030 for sustainable development goals and is a challenge that MDBs will want to face head on with new financing instruments such as pooled portfolio guarantees and hybrid capital