I am pleased to confirm that on Saturday 21 April, World Bank Governors welcomed the package of additional financing for, and reforms to, the World Bank Group (WBG). As a shareholder to the WBG, the UK is expected to contribute. The UK contribution of around $550 million (around £390 million based on current exchange rates) over an expected five years would support a package that is expected to enable US$315 billion of additional global development financing by June 2030, delivering life-changing development impacts globally.
This package is firmly in UK national interests and represents good value for money for UK taxpayers. The WBG is the largest development actor globally with the scale, expertise and experience to deliver life-changing development projects. It shares UK values and projects these globally. This package will further enable the WBG to support global development, prosperity and security, including through its work to: reduce poverty; support an open, rules-based, and predictable international trading system; mobilise private finance; and address sources of instability. This will support our prosperity and security at home, while maintaining the relevance of the WBG in the eyes of all its shareholders.
As a leading shareholder, the UK Government played a central role in supporting this package helping to shape important reforms that will further enhance WBG effectiveness and efficiency and support UK national interests. These included ensuring that the share of lending going to the poorest countries will increase and that wealthier countries, such as China, will pay more to borrow. This will support wealthier borrowers in their transition from being aid recipients to aid donors. Given the WBG’s impressive track record of supporting UK national interests and delivering results, and the further reforms that have been agreed, the UK Government supports the package.
Governors will be asked formally to agree the package by the Annual Meetings 12-14 October 2018. DFID will lay an Order before Parliament and a Departmental Minute relating to the increase in contingent liabilities, before making any payments towards this package (expected in 2019).
The package will involve a total of US$13.0 billion of paid-in capital from shareholders. It will also involve shareholders accepting an additional contingent liability of US$52.6 billion, the UK share of which is estimated to be around $1.9 billion (or around £1.4 billion).
This would comprise:
- US$7.5 billion of paid-in and US$52.6 billion of callable capital for the International Bank for Reconstruction and Development (IBRD), the WBG institution that provides financial support and advice to middle-income and creditworthy low-income countries;
- US$5.5 billion of paid-in capital for the International Finance Corporation (IFC), the WBG institution that provides financial support and advisory services the private sector in developing countries for projects with development impact; and
- an adjustment in relative shareholding in the IBRD to more closely reflect changes to the economic weight of its shareholders and their contributions to the International Development Association (IDA), the World Bank’s fund for the poorest countries, while maintaining UK’s joint fifth single seat on the IBRD board with France. IFC shareholding would also be adjusted to ensure that it is more closely aligned with IBRD shareholding while retaining the veto of the largest shareholder, the US.
Russia was isolated in indicating that it would not participate in the package. This intransigence occurs against a wider backdrop of continued Russian efforts to undermine multilateral cooperation.
The WBG has a proven track record in delivering life-changing development results, for example, between 2015 and 2017 it supported:
- 286.5 million people receive essential health, nutrition and population services;
- 81.2 million people get new or improved electricity services;
- 73.2 million people, microenterprises and SMEs receive financial services; and
- 53.9 million and 44.5 million people gain access to an improved water source and improved sanitation facilities respectively.
The IBRD and IFC’s financing models allow them to deliver many multiples of shareholder contributions in development finance. Each $1 of capital paid-in by shareholders has delivered almost $50 in development finance. This package, and the UK contribution within it, would enable the IBRD and IFC to deliver a further US$315 billion of global development financing by June 2030. This additional financing and the reforms secured will support the WBG in delivering further life-changing development outcomes.
As a leading shareholder in the WBG, UK Government engaged with the WBG management and other shareholders to support the package, while securing important reforms to further enhance the WBG’s efficiency and effectiveness. These included:
- Strengthening global peace, security and governance. Increased WBG investment in Fragile and Conflict Affected States, with IFC increasing its support for the poorest and most fragile countries to 40% of its total support by 2030 (from around 24% currently).
- Strengthening resilience and response to crises. A new crisis buffer for the IBRD, which would allow it to surge lending in crises. Investment in projects with climate change benefits increased to 30% of IBRD support by June 2023 and 35% of IFC support by June 2030.
- Promoting global prosperity. An increase in the mobilisation of private finance and further support for economic development and market creation through regulatory reform and infrastructure investment.
- Tackling extreme poverty and helping the world’s most vulnerable. IBRD support to its poorer clients will increase to 70% (from around 63% historically) of its total lending and the proportion of its projects that narrow gender gaps will increase to 55% by June 2023.
- Delivering value for money and efficiency. Further efficiencies. A new ‘Financial Sustainability Framework’ to help ensure that IBRD lending levels remain sustainable. Higher prices for wealthier countries, such as China, borrowing from IBRD.
 This and all further GBP figures in the Written Ministerial Statement are converted from USD using HMRC average exchange rate of April 2018 of £1 = $1.4065.
 See previous footnote.
This statement has also been made in the House of Lords