The World Bank seeks to expand its balance sheet to be able to better fund development projects and plans to add an additional lending capacity of $150 billion over the next decade, its president has said.
The Washington-based lender is looking to become a better, and more efficient bank and will utilise instruments such as portfolio guarantees and hybrid capital to expand the pool of funds at its disposal for lending to developing nations, Ajay Banga told a press briefing on the sidelines of the World Bank and International Monetary Fund annual meetings in Marrakesh on Wednesday.
The instruments such as portfolio guarantees and hybrid capital, which are also used by other multilateral development banks, are ways for countries to put capital into institutions such as the World Bank without changing the shareholder structure of the institution.
The World Bank, the biggest global funding institution for developing countries, is looking to grow its balance sheet and build additional lending capacity to help its clients deal with challenges including climate change, food security, health care, human and knowledge capital development and disaster recovery.
It is looking to use various instruments to increase its funding pool, as well as additional equity from shareholders to help it fund and deliver more projects.
Mr Banga said he will “definitely go back to shareholders” to seek more funding to become a “bigger” bank, “because I believe this is what the world needs”.
The World Bank is trying to bring all creditors to one table and transparently negotiate how to reduce debt burdens.
The idea of replacing the Common Framework – the multilateral mechanism for forgiving and restructuring sovereign debt – should be weighed carefully.
