Ajay Banga, the president of the World Bank Group, said on Tuesday that fresh contributions from wealthy nations along with improvements to the bank’s balance sheet may increase its lending ability by a total of $100 billion to $125 billion over the course of ten years.
The donations, according to Banga, would be made outside of the bank’s typical holding framework and regular country donations to the International Development Association’s (IDA) fund for the world’s poorest nations. He made this statement at a Council on Foreign Relations event.
They would include the $2.25 billion supplementary budget request from US President Joe Biden for the World Bank as well as anticipated contribution from Germany over the years, South Korea, Japan, Saudi Arabia, and Nordic nations, he said.
“I think we could add around $100 billion to $125 billion of additional lending capacity to the bank if everything goes through, includes the U.S., which is quite good. Good, but not enough,” stated Banga.
A World Bank representative later clarified that the overall rise he mentioned would include actions currently being taken to expand the lender’s financial position, such as an increase in leverage ratio approved in April that could result in $50 billion in additional lending over ten years.
The bank is also considering further guaranteeing loans, borrowing against accessible capital that is promised without being paid-in, and unique bonds that can act as hybrid capital as additional methods to increase lending.
Banga predicted that the Bank’s yearly gathering in Marrakech, Morocco, in the month of October would see the formal adoption of a new vision declaration that broadens the organization’s focus beyond eradicating poverty and fostering shared prosperity to address issues like climate change, pandemics, food insecurity, and fragility.
“I believe that the dual objectives should be the abolition of poverty. But on a sustainable earth,” he added, expecting the backing of all stockholders.
Banga claimed that he has not yet discussed a general equity increase and modifications to the bank’s shareholder structure with either the US or China.