World Bank to streamline loan, investment guarantees with $20 billion annual goal

By Thomson Reuters Feb 28, 2024 | 11:33 AM

By David Lawder

WASHINGTON (Reuters) -The World Bank Group said on Wednesday it would consolidate its loan and investment guarantee structure as part of its goal to triple its annual guarantees to $20 billion by 2030 to boost private renewable energy investments in developing countries.

The reforms, announced on the sidelines of a G20 finance leaders meeting in Sao Paulo, Brazil, would move all of the guarantee experts from across the World Bank’s business units into a single platform.

The bank said the changes, to start on July 1, would provide “a seamless experience for clients and easier access to the full suite of guarantees.”

The World Bank Group currently guarantees about $6.8 billion worth of loans and investment contracts annually across its business units, including the Multilateral Investment Guarantee Agency (MIGA), the private-sector International Finance Corp and its main International Bank for Reconstruction and Development lending arm.

The guarantees include insurance for credit risks, political risks, breach of contract, currency restrictions and other impediments to private investment in developing countries. Expanding these guarantees is a key component of the bank’s efforts to stretch its balance sheet and boost lending by more than $150 billion over 10 years to help fight climate change and other global crises.

The changes announced on Wednesday are the first tangible results from a group of private-sector investment executives assembled last year by World Bank President Ajay Banga, dubbed the Private Sector Investment Lab, to develop ideas to draw more private capital to clean energy and other investments in developing countries.

The World Bank said the plan called for simplifying guarantee products into a single comprehensive menu that would allow clients to easily identify and select the instrument best suiting their needs. A new common approach would standardize guarantee reviews, replacing a patchwork of different processes, rules and standards that now “holds back their potential and impedes client access,” the bank said.

“We need the private sector’s resources and ingenuity to tackle major global challenges,” Banga said in a statement. “Byconsolidating our offerings, simplifying processes and boosting access, we are delivering faster, easier access to guarantees for businesses.”

(Reporting by David Lawder; editing by Jonathan Oatis)