Who really benefits from the World Bank's new lending model?

World Bank President Jim Yong Kim and China's National Development and Reform Commission Chairman Xu Shaoshi sign a memorandum of understanding to expand cooperation on climate change efforts. The bank's new financial model would benefit middle-income countries like China. Photo by: Wu Zhiyi / World Bank / CC BY-NC-ND

As the World Bank’s management pushes through reforms that it claims will make the organization leaner and more efficient, they are also moving toward a new financial and risk model that will allow the bank to lend about 70 to 80 percent more to borrowing countries each year — without seeking more capital from donor countries.

The change will immediately benefit countries like Brazil, China and India, each of which will be able to borrow up to $2.5 billion more annually, Bertrand Badre, the bank’s chief financial officer, recently told reporters.

As the World Bank’s new financial model hopes to increase financial firepower in order to meet forecasted demand, Badre explained that changing the risk model will enable the Washington, D.C.-based institution to raise lending to $26-28 billion each year, up from the current level of $15 billion provided by the International Bank for Reconstruction and Development, the bank’s fund for middle-income countries.

The IBRD will thus become more critical to the bank’s relevance as a global lender at a time when countries like India graduate to middle-income status, but still need to borrow money.

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About the author

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    Paul Stephens

    Paul Stephens is a Devex staff writer based in Washington, D.C. His coverage focuses on Latin America and World Bank affairs, as well as Washington's global development scene. As a multimedia journalist, editor and producer, Paul has contributed to the Los Angeles Times, Washington Monthly, CBS Evening News, GlobalPost and the United Nations magazine, among other outlets. He's won a grant from the Pulitzer Center on Crisis Reporting for a 5-month, in-depth reporting project in Yemen after two stints in Georgia - one as a Peace Corps volunteer and another as a communications coordinator for the U.S. Agency for International Development.