Published On: Sun, Apr 22nd, 2018

World Bank jacks up share capital by $13 billion

World Bank shareholders have approved an increase in the bank’s lending capacity  after the United States backed a reform package that curbs loans and charges more for higher income countries like China.

World Bank President Jim Yong Kim: bank’s share capital raised by $13billion

World Bank President Jim Yong Kim said neither China nor any middle income countries was happy about the prospect of paying more for loans, but they agreed because of the overall increase in funds available.

The agreement, which also increases shares and voting power to large emerging market countries like China, was “a tremendous vote of confidence” in the institution that came after three years of tough negotiations, Kim said.

“World Bank Group bureaucrats don’t often jump around and high-five and hug each other,” Kim told a small group of reporters following the Spring meeting on Saturday.

He said the increase was needed because even with the end of the global financial crisis, the bank has been called on to provide funding to address a new series of challenges facing poor countries, like climate change, refugees, pandemics, “all new things for us.”

The increase provides an additional $13 billion in “paid in” capital: $7.5 billion to the main institution and $5.5 billion to the bank’s private financing arm, the International Finance Corporation.

Kim said the increase will allow the bank to ramp up lending to an average of $100 billion a year through 2030, from $60 billion in 2017 and an expected $80 billion in 2018.

Countries will have five years to provide the funds, but can ask for a three-year extension. The last increase occurred in 2010 and added $5 billion to the bank’s capital and $200 million for the IFC.

The United States, the institution’s biggest shareholder, rejected the World Bank request in October and the administration of US President Donald Trump has argued that multilateral lending institutions should graduate countries that have grown enough to finance their own development, like China.

But US Treasury Secretary Steven Mnuchin on Saturday said Washington supports the increase because of the reforms to lending rules.

“I look at this as a package transaction… we support a capital increase on the World Bank, along with the associated reforms that they’re talking about making,” Mnuchin told reporters.

The increase requires legislative approval, but Mnuchin said he was hopeful Congress would back the plan. Kim also said he has had contact with representatives from both parties and received strong support.

In a statement to the World Bank’s governing committee, Mnuchin applauded the plan to “significantly shift lending to poorer clients.”

While he did not mention China by name, Mnuchin applauded the shift to a “new income-based lending allocation target and the re-introduction of differentiated pricing” for loans — meaning wealthier countries would pay higher interest rates.

“The latter will incentivize better-off, more creditworthy borrowers to seek market financing to meet their needs for development,” he said.

Mnuchin said the new arrangement, including for the IFC, “frees resources for countries that don’t have sustainable access to private capital markets.”

China’s Vice Finance Minister Zhu Guangyao said Beijing supported increasing World Bank resources but had reservations about the agreement for changes in lending policies.

“We are concerned about some of the policy commitments in the capital package, such as those on graduation, maturity premium increase for loans and differentiated loan pricing based on national income per capita,” he said in a statement.

© 2018, Hallmarknews. All rights reserved. Reference and link to this site is required if you wish to reuse any article.

Reactions from Facebook

comments and opinions

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Most Shared

Recent posts

  • Python Dance 3: Uwazurike condemns planned military operation in the South East as unnecessary intimidation

    By OBINNA EZUGWU Senior lawyer and president emeritus of Igbo think tank group, Aka Ikenga, Chief Goddy Uwazurike has condemned the planned military operation in the South East zone, Python Dance 3, as unnecessary and an attempt to intimidate the people of the zone. Chief Uwazurike who registered his displeasure over the planned military exercise […]

  • Stocks: Oil sector stocks defy economic downturn in 2nd Quarter

    By TESLIM SHITTA-BEY Despite a mild economic recovery in 2018, Oil sector stocks listed on the main board of Nigeria’s stock exchange are only recently shaking off the anguish of last year’s sector melt down. Indeed of the six leading Oil-related companies that have published 2nd quarter results in 2018, Seplat beat the blues by […]

  • Bears clobber Bulls in major rout

    By FELIX OLOYEDE After a stellar 2017, The Nigerian Stock Exchange (NSE) has collapsed to becoming the fourth worst performing equity market on the global over the last six months as political pressure and a United States of America (USA) interest rate hike intensify investor’s apathy. The local bourse plunged 18.24 per cent over the […]

  • PDP Coalition: anxiety mounts over flag bearer

    By OBINNA EZUGWU With the recent defection of Senate President, Abubakar Bukola Saraki and Sokoto State governor, Aminu Waziri Tambuwal to the People’s Democratic Party (PDP), the list of anticipated presidential hopefuls under the main opposition party’s platform is complete. But it now faces an imminent danger of being torn apart by the collision of […]

  • H1: Zenith Bank waves the magic wand

    By OKEY ONYENWEAKU Despite weak economic tailwinds, Zenith Bank Plc is fashioning a path to stronger corporate earnings in the year 2018. The bank’s management has recently struck a pact with lower operating expenses relative income while putting a spear through the heart of nonperforming loans (NPLs) as the banks half year (H1) 2018 results […]

  • I will disclose my 2019 presidential ambition in due time – Saraki

    By OBINNA EZUGWU Senate President, Abubakar Bukola Saraki has said he will tell Nigerians whether or not he will run for president in 2019 when the time is ripe. Saraki who stated this while responding to questions from journalists during his world press conference earlier on Wednesday in Abuja, following Tuesday’s invasion of the National […]

  • 2019 election budget: NASS leadership meets INEC in Abuja

    The leadership of the National Assembly (NASS) is currently in a meeting with the Chairman of Independent National Electoral Commission (INEC), Prof. Mahmood Yakubu. The meeting is a special hearing on INEC’s budget for the 2019 elections. The ongoing meeting was also tweeted via INEC’s official handle, @inecnigeria, where it was stated that the meeting […]

  • At last, Senator Akpabio dumps PDP for APC

    Former Minority Leader of the Senate, Senator Godswill Akpabio, on Wednesday officially decamped from the Peoples Democratic Party (PDP) to the All Progressives Congress (APC). Akpabio was welcomed to the ruling party at a rally organised for him by the Akwa Ibom State chapter of the APC. Some of the senators in attendance were Abdullahi […]

  • Sack of DSS boss: Osinbajo has made it clear invasion order didn’t come from him – Uwazurike

    Senior lawyer and president emeritus of Igbo think tank group, Aka Ikenga, Chief Goddy Uwazurike has commended Nigeria’s Acting President, Professor Yemi Osinbajo for summoning courage to sack the Director General of the DSS, Lawal Daura over Tuesday’s invasion of the National Assembly, noting that the Acting President, has, by his action, made it clear […]

  • NASS siege: Acting President, Osinbajo sacks DSS boss, Lawal Daura

    Acting President, Yemi Osinbajo, has sacked the Director-General of the Department of State Service (DSS), Lawal Daura following the siege on the National Assembly by security operatives on Tuesday. Osinbajo’s spokesman, Laolu Akande, disclosed Daura’s sacking on his Twitter handle, @akandeoj. He wrote, “AgP Yemi Osinbajo has directed the termination of the appointment of the […]

  • We want to restore Abia to its deserved glory—Otti

    Okey Onyenweaku Dr. Alex Otti, a forefront contestant for the post of Governor of Abia State, yesterday Sunday August 5, 2018 said in Lagos that he was gunning for position of Governor of the State to change the story of the Igbo man in Nigeria and perhaps the world. Otti, who met with friends at […]

  • Stocks: Investors scout for hidden value as market turns bearish

    By TESLIM SHITTA-BEY As Nigeria’s Stock Exchange’s All Shares Index (ASI) dips below a year-to-date yield of zero per cent (-4.58 per cent at the close of the previous week’s business on Friday), a growing number of investors have put gun sights on emerging hidden value opportunities in the market. So far the results have […]

  • Naira remains stable as foreign portfolio investors take lackluster position

    By FELIX OLOYEDE Review of Nigeria’s foreign exchange market in the last one month has revealed that the Central Bank of Nigeria (CBN) regular intervention in the market has kept the naira stable as foreign portfolio investors (FPIs) adopt a wait-and-see position in the equities market.  The local currency has been stable within a band […]

  • Saraki’ defection deepens NASS-APC logjam

    …as impeachment plot thickens and lawyers sing discordant tunes By OBINNA EZUGWU Last week, Nigeria’s Senate President, Dr. Abubakar Bukola Saraki, capped what has been days of the ruling All Progressives Congress’s (APC) unraveling when he finally and formally quit the party for the opposition People’s Democratic Party (PDP), taking with him the governor of […]

  • SARAKI: Power, Wealth, Mystic

    By OBINNA EZUGWU Bukola Abubakar Saraki is a political force of nature. His meteoric rise to national prominence in a relatively short time has left even his most ardent critics grudgingly envious of his achievements that have since overshadowed that of his late father, Abubakar Saraki, who bestrode the politics of the North Central State […]

  • Booming oil prices puts Nigeria at risk

    By AYOOLA OLAOLUWA Rising oil prices, once a big blessing may now be a curse for Nigeria, BusinessHallmark findings have revealed. The nation is now daily raking in millions of dollars as proceeds from crude sales due to rising oil prices. Since December 2017, the Brent benchmark oil price has soared by about 40%, to […]