2018.04.2220:55:00UTC+00World Bank Gains Member Support for $13 Billion Capital Increase

The World Bank gained support from its member countries for a $13 billion capital hike, with the U.S. dropping its objection as the lender imposes measures that would potentially trim loans to China.

The boost will be accompanied by internal steps “including operational changes and effectiveness reforms, loan pricing measures, and other policy steps,” the World Bank said.

The multilateral lender said the plan would allow it to raise the group's overall lending to almost $80 billion in fiscal 2019 from about $59 billion in 2017 and to an average of about $100 billion annually through 2030.

The hard-fought capital increase will add $7.5 billion paid-in capital for the World Bank's main concessional lending arm, the International Bank for Reconstruction and Development.

Its commercial-terms lender, the International Finance Corp, will get $5.5 billion paid-in capital, and IBRD also will get a $52.6 billion increase in callable capital.

China will probably “gradually” end up borrowing less from the World Bank under the new system, which will charge higher rates of interest to wealthier countries, World Bank President Jim Yong Kim said.

The U.S. dropped objections to the capital boost after previously advocating for a limit on the World Bank's resources and questioning why it lends so much to China, given the nation's growing economic clout and ability to raise money in financial markets. However, countries such as the U.K. had been pushing for a capital increase, arguing the lender needs more firepower to finance projects in developing countries.