World Bank Group commitments to developing countries hit nearly $64 billion in fiscal year 2018, which ended June 30, with record increases in human development, climate finance, and IDA support.
|World Bank Group Commitments fiscal years 2018 and 2017 (in U.S. billions)|
|World Bank Group||FY18*||FY17|
|*Preliminary and unaudited numbers as of July 18.|
|**Long-term finance from IFC’s own account. Excludes about $11.6 billion in FY18 and $7.5 billion in FY17 in funds mobilized from other investors.|
“Demand continues to rise for our finance, expertise, and innovation,” World Bank Group President Jim Yong Kim said. “In the last fiscal year, our shareholders improved our ability to meet that demand with a historic $13 billion capital increase, which will help us address the most critical challenges of our time, and help our client countries – and their people – reach their highest aspirations. The capital increase was a strong vote of confidence in the World Bank Group’s staff, who work tirelessly across the globe to end extreme poverty and boost shared prosperity.”
Human Development lending—which spans education; health, nutrition and population; social protection; and jobs—increased by a record 74 percent. Its share in the World Bank’s total commitments for the year saw an unprecedented increase, going to 25.2 percent in FY18 from 16 percent in FY17. This significant shift demonstrates increased demand by countries to invest in building human capital, reflecting the priorities of the Human Capital Project, an ambitious effort to accelerate more and better investments in people that was announced at the World Bank Group’s 2017 Annual Meetings.
In addition, in fiscal year 2018, 32.1 percent of World Bank Group financing was climate change-related – already exceeding a target set in 2015 of 28 percent of lending volume to be climate-related by 2020. With a record-setting $20.5 billion in climate-related financing delivered in the last fiscal year, the World Bank Group continues to step up its support to developing countries to reduce greenhouse gas emissions and build resilience to increasingly intense climate change impacts. A record 45 percent of FY18 World Bank (IBRD/IDA) agriculture lending will deliver climate co-benefits, making good on the potential of agriculture to contribute to the climate solutions that are so urgently needed. Total lending in the Food and Agriculture Global Practice also rose sharply to $4.65 billion in new IDA/IBRD commitments, up from $2.5 billion in FY17.
Support to countries from the International Bank for Reconstruction and Development (IBRD), which provides financing, risk management products, and other financial services to members, rose to $23 billion in FY18, up from $22.6 billion in the previous fiscal year. IBRD mobilized this financing for development through innovative capital market instruments; in fiscal 2018, IBRD issued $36 billion in bonds in 27 currencies to fund sustainable development activities in middle-income countries. In addition, IBRD bonds raise investor awareness for the role of the private sector in achieving the Sustainable Development Goals, with specific bonds to highlight SDGs such as Good Health and Well Being, Gender Equality, Responsible Consumption and Production, and Climate Action.
IBRD is also the largest provider of sovereign risk insurance, using capital market instruments in innovative ways to protect countries against losses from disasters. In fiscal 2018, IBRD issued catastrophe bonds that provide $1.36 billion in earthquake protection to Chile, Colombia, Mexico and Peru. This was the largest sovereign risk insurance transaction and the second largest in the history of the catastrophe bond market. It enabled Chile, Colombia, and Peru to access insurance from the capital markets for the first time. Separately, IBRD issued a $360 million catastrophe bond to protect Mexico from earthquake and hurricane risk. The bond was triggered by an earthquake last September, resulting in a $150 million payout to Mexico to support its recovery.
Commitments from the International Development Association (IDA), which provides zero or low-interest loans and grants to the world’s 75poorest countries, hit a record $24 billion during the first year of IDA18. IDA’s increased commitments reflect strong demand for financing, marked by a 27 percent increase compared to the first year of IDA17. FY18 represents a historic step for IDA in terms of policy and financing innovations including new ways to address rising risks of fragility, mobilize private sector investments, and increase capacity for climate financing.
These efforts include $446 million through the new Refugee Window to support countries that host significant refugee populations and $340 million through the Crisis Response Window to respond to natural disasters, public health emergencies and economic shocks. A total of $185 million has been committed through the Private Sector Window, along with $609 million from IFC/MIGA, facilitating over $800 million of other financing to private sector projects. On climate change, IDA is on track to deliver the IDA18 commitments and has already doubled investments in renewable energy compared to the last three years.
In April 2018, IDA marked its debut in the global capital markets, issuing bonds for the first time in its nearly 60-year history and launching a new financing model for development. IDA’s first bond raised $1.5 billion as investors around the globe seized the opportunity to invest in a triple-A rated asset and support life-changing investments in the poorest countries. IDA’s borrowing program will supplement donor financing to enable IDA to significantly scale up its support toward achieving the Sustainable Development Goals.
The International Finance Corporation (IFC), the largest global development institution focused exclusively on the private sector, leveraged its capital, expertise, and influence to create markets and opportunities wherever they were needed most. Preliminary and unaudited data as of June 30 indicated that IFC’s long-term investments totaled more than $23 billion, including funds mobilized from other investors. In FY18, IFC made nearly $11.6 billion in long-term investments from its own account and mobilized about $11.6 billion from other investors. These often-complex investments supported 366 long-term finance projects in developing countries around the world.
IFC maintained its strategic focus on the poorest countries and regions. It provided more than $6.8 billion in long-term financing to accelerate development in IDA countries, including funds mobilized from other investors. These countries accounted for nearly 29 percent of IFC’s total investments. Investments in businesses in fragile and conflict-affected areas totaled more than $3.7 billion, including funds mobilized from other investors.
The Multilateral Investment Guarantee Agency (MIGA), which has a mandate of facilitating FDI to developing countries by extending political risk insurance and credit enhancement, issued a record $5.3 billion in new guarantees. These guarantees will help provide access to power for some 8 million people, improve access to new or better telecommunications services for 1.4 million people, generate $1.4 billion in fees and taxes for host governments, and avoid an estimated 3 million tons of CO2e emissions. In FY18, MIGA guarantees helped finance projects worth $17.9 billion in developing countries, and its total gross portfolio doubled since FY13, reaching $21.2 billion in support of 161 projects across 67 countries. New guarantee issuance also doubled in FY18, as compared to FY13.