World Bank shareholders back $13 billion capital increase
![World Bank shareholders back $13 billion capital increase World Bank shareholders back $13 billion capital increase](https://cdn.zeebiz.com/sites/default/files/styles/zeebiz_850x478/public/2018/04/22/35504-world-bank-zeenews-team.jpg?itok=IhhfD606&c=2f41f7822224c4fb29723d6ba62d876b)
The World Bank`s shareholders on Saturday endorsed a $13 billion paid-in capital increase that will boost China`s shareholding but bring lending reforms that will raise borrowing costs for higher-middle-income countries, including China.
The multilateral lender said the plan would allow it to lift the group`s overall lending to nearly $80 billion in fiscal 2019 from about $59 billion last year and to an average of about $100 billion annually through 2030.
"We have more than doubled the capacity of the World Bank Group," the institution`s president, Jim Yong Kim, told reporters during the International Monetary Fund and World Bank spring meetings in Washington.
"It`s a huge vote of confidence, but the expectations are enormous."
The hard-fought capital hike, initially resisted by the Trump administration, will add $7.5 billion paid-in capital for the World Bank`s main concessional lending arm, the International Bank for Reconstruction and Development.
Its commercial-terms lender, the International Finance Corp, will get $5.5 billion paid-in capital, and IBRD also will get a $52.6 billion increase in callable capital.
LENDING REFORMS
The bank agreed to change IBRD`s lending rules to charge higher rates for developing countries with higher incomes, to discourage them from excessive borrowing.
IBRD previously had charged similar rates for all borrowers, and U.S. Treasury officials had complained that it was lending too much to China and other bigger emerging markets.
U.S. Treasury Secretary Steven Mnuchin said earlier on Saturday that he supported the capital hike due to the reforms that it included. The last World Bank capital increase came in 2010.
The current hike comes with cost controls and salary restrictions that will hold World Bank compensation to "a little below average" for the financial sector, Kim said.
He added that there was nothing specific in the agreement that targeted a China lending reduction, but he said lending to China was expected to gradually decline.
In 2015, China founded the Asian Infrastructure Investment Bank, and lends heavily to developing countries through its government export banks.
The agreement will lift China`s shareholding in IBRD to 6.01 percent from 4.68 percent, while the U.S. share would dip slightly to 16.77 percent from 16.89 percent. Washington will still keep its veto power over IBRD and IFC decisions.
Kim said the increase was expected to become fully effective by the time the World Bank`s new fiscal year starts on July 1. Countries will have up to eight years to pay for the capital increase.
The U.S. contribution is subject to approval by Congress.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
![https://www.zeebiz.com/markets/stocks/photo-gallery-this-tata-group-stock-turned-every-rs-10000-of-investment-into-rs-11300-in-just-a-week-investors-richer-by-42722-crore-rupees-any-guesses-share-market-news-304023](https://cdn.zeebiz.com/sites/default/files/styles/zeebiz_700x394/public/2024/07/26/307143-tradingpexels.jpg?itok=rw4R7EfH)
A Tata group stock just turned every Rs 10,000 of investment into Rs 11,300 in just a week, investors richer by Rs 42,722 crore; any guesses?
![https://www.zeebiz.com/markets/stocks/photo-gallery-large-cap-midcap-stocks-shares-to-buy-for-long-term-check-out-targets-nifty-sensex-303617](https://cdn.zeebiz.com/sites/default/files/styles/zeebiz_700x394/public/2024/07/25/306716-stockks.jpg?itok=KJTrFUIK)
Stocks to buy for long term: Analysts suggest buying these 5 largecap, 4 midcap scrips; check out targets
![https://www.zeebiz.com/personal-finance/photo-gallery-nps-retirement-planning-budget-2024-nirmala-sitharaman-announcement-how-nps-rulebook-change-can-increase-corpus-income-and-monthly-pension-by-40-compound-return-303984](https://cdn.zeebiz.com/sites/default/files/styles/zeebiz_700x394/public/2024/07/26/307102-indian-currency-pixabay-take.jpg?itok=kN21EW-9)
How your NPS retirement corpus and monthly pension can jump by 40% after this rule change; get details
![https://www.zeebiz.com/personal-finance/photo-gallery-senior-citizen-savings-scheme-scss-2024-interest-rate-calculator-post-office-how-to-get-inr-rs-50000-interest-retirement-planning-guaranteed-return-maturity-amount-small-savings-303930](https://cdn.zeebiz.com/sites/default/files/styles/zeebiz_700x394/public/2024/07/26/307042-fd-interest-file.jpg?itok=45ZbBRWM)
How much investment do you need in this senior citizen scheme to get Rs 50,000 quarterly interest? Know here
10:23 AM IST