Demand for World Bank loans rises to record levels

By on 11/04/2016

Demand for World Bank lending from developing countries reached $23.5bn in 2015 – the highest it has ever been outside a financial crisis, according to figures released today.

With global economic growth projected at 2.9% in 2016 – picking up at a slower pace than previously expected – requests from middle-income countries for help from the World Bank’s International Bank for Reconstruction and Development (IBRD) has been on the up.

The bank expects that demand for these loans in 2016 will easily eclipse last year’s record, with lending projected to rise above $25bn.

Demand for non-lending advisory services, to help clients implement important policy changes, is also higher than ever, the bank reports.

“Developing country governments are feeling the pressure to find additional ways to accelerate growth, in the current downturn,” said Jan Walliser, the bank’s vice president for equitable growth, finance, and institutions.

He added that middle-income countries must now seek to improve long-term growth trends by implementing a “broad set of legal, regulatory, institutional, and even logistical reforms that make investing more attractive.”

“Focusing now on structural reform is the recommendation of both mainstream economists and of G20 governments,” he said.

The IBRD is the original World Bank institution, which was created in 1944 to help Europe rebuild after World War II.

Today, it works closely with the rest of the World Bank Group to help developing countries reduce poverty, promote economic growth, and build prosperity.

It is owned by the governments of its 188 member countries, and supports long-term human and social development that private creditors do not finance; preserves borrowers’ financial strength by providing support in times of crisis when poor people are most adversely affected; promotes key policy and institutional reforms – such as safety net or anti-corruption reforms; creates a favorable investment climate to catalyse the provision of private capital; and facilitates access to financial markets often at more favourable terms than members can achieve on their own.

There are currently 104 countries which fall into the World Bank’s middle-income classification – economies with a gross national income (GNI) per capita of more than $1,045 but less than $12,736.

Compared to that, there are 48 non-OECD and 32 OECD countries which fall into the high income category – i.e. those with a GNI per capita of $12,736 or more.

Malawi has the world’s lowest reported GNI per capita at $250, while Monaco has the highest, at more than $100,000 – more than 400 times more per person on average than Malawi.

The World Bank’s latest GNI estimates have shown that several low-income countries moved up to become middle income economies, including Bangladesh, Kenya, Myanmar, Vietnam and Tajikistan.

The 2015 World Bank figures also show that Argentina, Hungary, Seychelles, and Venezuela moved from the middle income category to high income, with average per capita income levels having risen to $12,736 or more.

GNI is a broad-based measure of income generated by a nation’s residents from international and domestic activity.

GNI per capita measures the average amount of resources available to persons residing in a given economy, and reflects the average economic well-being of a population.

Each year on July 1, the World Bank revises the income classification of the world’s economies based on estimates of GNI per capita for the previous year.

 

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About Winnie Agbonlahor

Winnie is news editor of Global Government Forum. She previously reported for Civil Service World - the trade magazine for senior UK government officials. Originally from Germany, Winnie first came to the UK in 2006 to study a BA in Journalism & Russian at the University of Sheffield. She is bilingual in English and German, and, after spending an academic year abroad in Russia and reporting for the Moscow Times, Winnie also speaks Russian fluently.

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