World Bank Group, IMF Spring Meetings See Capital Increase, Historic Bond Debut for SDGs
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The Development Committee Communiqué recognizes that the WBG has set out an ambitious strategy to support achievement of the 2030 Agenda for Sustainable Development, and the new package will enable the WBG to support drivers of long-term sustainable growth, including investments in human capital and resilience.

The International Development Association made its debut in the capital markets, with an inaugural benchmark bond that marks the launch of its borrowing program.

21 April 2018: Shareholders of the World Bank Group (WBG) endorsed a package of measures that includes a US$13 billion paid-in capital increase, a series of internal reforms, and policy measures that strengthen the WBG’s ability to scale up resources and deliver in areas of the world that need the most assistance. The International Development Association (IDA) also made an historic capital market debut with an inaugural benchmark bond that was nearly five times oversubscribed and will support the SDGs.

The 2018 Spring Meetings of the WBG and the International Monetary Fund (IMF) took place from 16-22 April 2018, in Washington, DC, US, and brought together central bankers, ministers of finance and development, private sector executives, representatives of civil society, and academics to discuss issues of global concern.

The package agreed by the Development Committee consists of US$ 7.5 billion paid-in capital for the International Bank for Reconstruction and Development (IBRD) and $5.5 billion paid-in capital for the International Finance Corporation (IFC), through both general and selective capital increases, as well as a $52.6 billion callable capital increase for IBRD. The boost in capital will be augmented by a range of internal measures including operational changes and effectiveness reforms, loan pricing measures, and other policy steps.

The combined financing arms of the WBG are expected to reach an average annual capacity of nearly $100 billion between financial years 2019-2030, benefiting all WBG members across the income spectrum. The Development Committee Communiqué recognizes that the WBG has set out an ambitious strategy to support achievement of the 2030 Agenda for Sustainable Development, and the new package will enable the WBG to support drivers of long-term sustainable growth, including investments in human capital and resilience.

The Communiqué notes that the private sector needs to play a much greater role in development and calls on the World Bank, IFC, and the Multilateral Investment Guarantee Agency (MIGA) to work together to tackle market and regulatory imperfections, strengthen policies and institutional capacity, and collaborate to mobilize private investment for inclusive development and poverty reduction. The text underlines that the WBG “must continue to crowd in private sector resources” to contribute to stability and growth potential, quality infrastructure, and human capital, including through strengthened health and education systems and enhanced skills development and local job creation. The Communiqué also urges the WBG and the IMF to further enhance their support for governments seeking to boost domestic resource mobilization and combat illicit financial flows (IFFs).

The Development Committee noted “with concern” the marked increase in public debt levels in low-income countries in recent years, and called on the WBG and IMF to work together on a multi-pronged approach to reduce public debt vulnerabilities. To that end, it welcomed the upcoming roll-out of an upgraded Debt Sustainability Framework for low-income countries by the two institutions, which aims to enable a richer analysis and assessment of public debt vulnerabilities by governments.

The Communiqué further notes that the Committee is expecting “rigorous implementation” of the new Environment and Social Framework and is looking forward to continued WBG follow up on the recommendations of the Gender Based Violence Task Force.

The Development Committee also accepted the recommendations of the Shareholding Review completed in 2018, which included a Selective Capital Increase for IBRD that will result in rebalanced shareholding. The Increase will reduce extreme under-representation while continuing to deliver increased voice and representation for emerging markets and developing economies in manageable steps. The next meeting of the Development Committee is scheduled for 13 October 2018, in Bali, Indonesia.

Also during the 2018 Spring Meetings, on 17 April the IDA made its debut in the capital markets, joining a select group of top-tier supranational issuers with an inaugural benchmark bond that raised US$ 1.5 billion on the back of an order book totaling US$4.6 billion from investors around the world. The 5-year bond marks the launch of IDA’s borrowing program. After the bond was announced early morning on April 16, investors responded with strong interest in the debut issue, reaching US$2 billion in the first few hours and exceeding US$2.8 billion by the end of the day. [Press Release World Bank Group][Development Committee Communiqué][IDA Press Release] [SDG Knowledge Hub update on climate institutional finance at Spring Meetings]


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