World Bank wins $11 billion in pledges to boost lending for climate, global crises

WASHINGTON: 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, Reuters reported.

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 US 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 and expanded bilateral guarantees to unlock another $10 billion in financing.

The bulk of the latest funding pledge, around $9 billion, was made by the US to the new Portfolio Guarantee Platform which backs private loans and equity investments in qualifying projects.

But Washington’s contribution will not be all cash. It will come partly as a US guarantee for the World Bank’s platform, backed by a $750 million appropriation request to Congress, a US Treasury official said. This will limit the pledge’s leverage to four times, enabling $36 billion of additional lending over a decade, the official added.

Japan said it is contributing $1 billion to the guarantee program, France is expected to contribute $500 million and Belgium an undisclosed amount. Contributing to the mechanism for hybrid capital - an instrument that includes features of both debt and

equity to leverage loans - are Britain, Denmark, Germany, Italy, Latvia, the Netherlands, and Norway. Britain said it is contributing 100 million pounds

Anshula Kant, World Bank chief financial officer, said the facilities will finance only projects that have cross-border benefits, such as those that reduce greenhouse gas emissions, or help prevent pandemics.

“These instruments encourage donors to contribute on a voluntary basis for these causes and projects,” Kant told Reuters. “On the other side, it incentivizes borrowing countries to invest in these kinds of projects, where the benefits are not limited to within their borders.”

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. Agencies