Post Views: 1,077 Rising from a wrap-up gathering of its 2018 spring meeting in Washington D.C., shareholders of the World Bank Group, on Saturday end...
Rising from a wrap-up gathering of its 2018 spring meeting in Washington D.C., shareholders of the World Bank Group, on Saturday endorsed an ambitious package that includes a $13bn paid-in capital increase for the fight against global poverty.
This is among a series of internal reforms and set of policy measures to strengthen the International Finance Corporation, the International Bank for Reconstruction and Development (IBRD), two global poverty fighting institution, thereby scaling up assistance in areas of the world in need of assistance.
The package agreed by the Development Committee of the Board of Governors, according to a statement by the group, consists of $7.5bn paid-in capital for IBRD and $5.5bn for IFC, through both general and selective capital increases, as well as a $52.6bn callable capital increase for IBRD.
The boost in capital will be augmented by a broad range of internal measures including operational changes and effectiveness reforms, loan pricing measures, and other policy steps to create an even stronger World Bank Group, the statement added.
The agreed capital package for IBRD and IFC, the group said, builds on the strong commitment of contributors to IDA, as demonstrated in the IDA18 replenishment, the successful launch of IDA in the capital market, and strengthened MIGA financial capacity.
With Saturday’s move, the combined financing arms of the World Bank Group are expected to reach an average annual capacity of nearly $100bn between financial year 2019 and 2030, benefiting all Bank Group members across the income spectrum.
Commenting on the decision, World Bank Group President Jim Yong Kim noted that “through the historic agreement endorsed today, our shareholders have clearly demonstrated a renewed confidence in global cooperation, and we greatly appreciate this strong support from our member countries. This boost in capital was essential for us to advance our efforts to mobilize additional finance for development to meet the aspirations of the people we serve.
“Our shareholders have asked the Bank Group to step up our leadership role in addressing the multiple overlapping challenges of our time, and this capital package allows for greater responsiveness to risks to global stability and security, particularly in poorer countries and fragile states.”
The package endorsed by the Development Committee follows through on shareholders’ commitment for the World Bank Group to better assist all client countries in addressing global challenges while deploying scaled-up assistance to areas that most need financing.
The statement noted also that across client groups, the World Bank Group will be able to support drivers of long-term sustainable growth—including investments in human capital and resilience. The package also puts forward a robust commitment by the World Bank Group to further strengthen its operational model and effectiveness.
The Development Committee also accepted the recommendations of the Shareholding Review completed earlier this year, including a Selective Capital Increase (SCI) for IBRD which will result in rebalanced shareholding and reduce extreme under-representation while continuing to deliver increased voice and representation for emerging markets and developing economies in manageable steps.
“The recommendations also included an SCI for IFC, which will result in a more closely aligned voting power between the institutions of the World Bank Group and will contribute to the IFC capital increase,” the statement added.
Also, the “shareholders reiterated their commitment to the twin goals of ending extreme (global) poverty and boosting shared prosperity and to the four key priorities that the World Bank Group’s Forward Look established: (i) stay engaged with all clients; (ii) lead on the Global Public Goods agenda; (iii) mobilize capital and create markets; and (iv) continually improve effectiveness and the internal operational model.”
The Development Committee communiqué noted the challenging environment in which the package was endorsed: “The capital package has been developed against the backdrop of a changing and increasingly complex development landscape. Despite impressive gains in recent decades, development progress remains uneven. Keeping up the pace of past progress and addressing emerging challenges will require sustained effort in the face of persistent global headwinds and structural changes to the global economy.”
The Development Committee welcomed the successful conclusion of the negotiations on the financial and policy package, and have asked the Board and management to submit draft resolutions to Governors by the end of June for approval by the Annual Meetings 2018.