World Bank Looking to Expand Lending for Climate Change and Other Crises

The World Bank is looking to expand its lending capacity to tackle issues regarding climate change and other global crises. They are set to negotiate with shareholders before the April meetings that will discuss proposals that would incorporate new lending tools and a capital increase as indicated in their “evolution roadmap”

This roadmap document signifies the beginning of the negotiation process to modify the World Bank’s financial resources and mission to move away from a county and project-specific lending model used since its inception post-World War Two.

The World Bank is targeting at having specific proposals to change its mission, financial capacity, and operating model for approval by the International Monetary Fund Development Committee and the World Bank come October.

The World Bank is willing to explore other areas such as changes to its capital structure and potential new capital increases to utilize more lending capacity and financing tools like guarantees for private sector loans and other means to mobilize private capital.

Despite this, the World Bank Group (WBG) is not willing to follow the demands from non-profit organizations to leave their longstanding top-tier credit rating to increase lending, saying that “Management will explore all options that increase the capacity of the WBG whilst maintaining the AAA rating of the WBG entities.”

It was also mentioned that proposals that are being reviewed would encompass higher statutory lending limits, use of callable capital, and lower equity-to-loan requirements.

“The challenges the world is facing call for a massive step up in the international community’s support,”

“For the WBG to continue to play a central role in development and climate finance, it will need a concerted effort by both shareholders and management to step up WBG financing capacity.” mentioned the World Bank in the document.

Source: Inquirer