The World Bank is making changes aimed at expanding its lending capacity and making lending more affordable.
The International Bank for Reconstruction and Development (IBRD) has cut its capital lending rate by one percentage point to 18%, which is expected to bring in an additional $30 billion in financing.
The World Bank said in a statement on Tuesday that the measures, combined with previous changes, “could enable more than $150 billion in additional lending over 10 years.”
President Ajay Banga told Reuters the reforms were recommended in an independent report prepared for the Group of 20 developed and developing countries. The president said the change was also requested by shareholders, including the United States.
Lower interest rates “free up capacity on our balance sheet, allowing us to lend more,” Banga said. “Whenever we can responsibly ensure further optimization of IBRD’s balance sheet, we will do so.”
In 2023, IBRD reduced the equity and loan ratio from 20% to 19%.
In addition to lowering lending rates, the World Bank announced it would eliminate some fees to help countries “borrow and repay money more easily.”
“We will lower the fees for lending to small countries that need our support the most. … These measures will make our loans easier to access and cheaper to repay.”
The latest changes do not affect the triple-A rating, the World Bank reported.
Banga also told Reuters that the World Bank wants to increase funding to the world’s poorest countries by more than $100 billion, up to $120 billion, through the International Development Association.
But achieving that goal would require World Bank shareholders and donor countries to increase their contributions from $24 billion to $30 billion, which could be difficult in the current global financial climate. However, Denmark has already announced a 40% increase in contributions.
Some information in this report was provided by Reuters.
