(Yicai Global) April 23 -- The World Bank’s recent USD13-billion capital increase makes China the lender’s third-largest shareholder, although it will be able to borrow less as the bank looks to focus on poverty-stricken nations.
The increase, approved by members yesterday, will give China a 5.7-percent share of voting rights, 1.26 percentage points greater than before, China’s communist-aligned news agency Global Times reported. Some USD7.5 billion will go toward the International Bank for Reconstruction and Development with the remainder going to the World Bank’s private financing arm the International Finance Commission.
The US and Japan will remain as the top stakeholders, though their holdings in the bank will diminish to 15.87 and 6.83 percent. Voting rights are based on the size of economies and their contributions to the bank.
The US initially objected to a capital boost after pushing for the lender to limit resources and questioning why it handed out so many loans to China, a rising economic force, Bloomberg reported. Other nations, such as the United Kingdom, have been looking for the bank to finance more projects in developing countries, it added.
The World Bank will use the new funds to resolve urgent issues, such as refugees and pandemics, and better help poor and vulnerable countries, the Global Times cited President Jim Yong Kim as saying. He hopes the capital increase plan will be in full swing in time for its new fiscal year, which begins July 1.
Given China’s position as an ‘upper middle-income’ nation (one with gross national income per capita between USD3,956 and USD12,235), it will be out of the running for many loans which the World Bank will be looking to hand out to ‘lower middle-income countries’ (those with GNI per capita between USD1,006 and USD3,955).
The capital injection will allow the bank to ramp up lending to an average USD100 billion a year through 2030, Kim said. It forecasts it will lend USD80 billion in 2018 after issuing loans worth USD60 billion in 2017.
Editor: James Boynton