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The World Bank has introduced innovative measures to enhance its lending capabilities to the world’s most impoverished nations, with a focus on addressing climate change and pandemics in addition to its traditional responsibility of alleviating poverty.
Under a new $5bn guarantee program, shareholder countries can now pledge to repay loans on behalf of defaulting countries. This initiative is expected to increase available funds by $30bn over the next decade while maintaining a AAA credit rating.
In pursuit of its goals, the Bank aims to drive impactful development, take more risks, and promote inclusivity, resilience, and sustainability.
The Bank is also working with shareholders and rating agencies to expand lending against its callable capital, which governments have pledged to provide in times of financial distress.
Ajay Banga, the newly appointed President of the World Bank, will emphasize the importance of maximizing resources while preserving the Bank’s AAA credit rating during a speech at the G20.
Banga will assert the need for financing a world that prioritizes climate resilience, pandemics management, abundant food supply, and the eradication of poverty.
While maintaining its AAA rating has been a longstanding priority for the World Bank, a G20-commissioned report suggests that multilateral development banks can potentially take on more financial risk without compromising their top-tier ratings.
Banga will acknowledge the Bank’s response to calls for reform and propose a vision focused on eliminating poverty in a sustainable world.
Additionally, the Bank has initiated fundraising efforts for a crisis facility that will provide concessional funds to the world’s poorest countries, with a fundraising target of $6bn.
Last month, the World Bank announced measures allowing countries affected by disasters to temporarily suspend loan repayments and redirect funds toward crisis response.
The World Bank has faced criticism for its perceived inadequacy in addressing the global climate crisis while prioritizing poverty reduction.
Former President David Malpass resigned from his position following controversy surrounding his reluctance to attribute climate change to human activity. He later clarified his statements, citing misinterpretation.
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