World Bank loans to developing countries rise to $150bn

The World Bank said on Monday it expects its non-market rate lending to top $43 billion in the current fiscal year as developing countries face economic headwinds, bringing its total for the past four years to more than $150 billion.
The multilateral bank said its International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) divisions are on pace to exceed the combined $42.4 billion reached in the fiscal year ended July 1, 2015.
IBRD lending in fiscal 2016 will exceed $25 billion, compared with $23.5 billion in fiscal 2015. A decade ago, the IBRD lent about $14 billion but peaked at $44 billion in fiscal 2010 as the financial crisis stoked demand from middle-income countries.
“We are in a global economy where growth is expected to remain weak, so it is critically important that the World Bank play our traditional role of helping developing countries accelerate growth,” World Bank Group President, Jim Yong Kim, said in a statement.

In February, the World Bank signed a deal with Peru for $2.5 billion in credit lines to help the Andean copper and gold exporter cope with lower global commodity prices and budget pressures. The bank is also in talks with oil exporter, Nigeria, on loans tied to policy reforms.
Kim said World Bank lending was “highly complementary” to the International Monetary Fund’s role as the main international crisis lender.
“The use of these types of loans are important because the bank is basically signalling to the financial markets that a country’s actions are technically solid, the country will follow through on these commitments and the reforms will help and not hurt the poor and vulnerable,” Kim said.
Meanwhile, World Bank lowered its 2016 sub-Saharan African growth forecast to 3.3 per cent from a previous forecast of 4.4 per cent in October, citing plunging global commodity prices.

The bank said the commodity price rout, particularly for oil which fell 67 per cent from June 2014 to December 2015, as well as weak global growth were behind the region’s lacklustre performance. “Overall, growth is projected to pick up in 2017-2018 to 4.5 per cent,” the World Bank said in a statement.
It said a projected uptick in economic activity next year would be driven by economic powerhouses, South Africa, Nigeria and Angola as commodity prices stabilise.
Nigeria and Angola are the continent’s top two crude oil exporters whose economies have suffered as a result of sharply lower crude prices, while South Africa was also hit by lower platinum, iron ore and coal prices.
“There were some bright spots where growth continued to be robust such as in Cote d’Ivoire, which saw a favourable policy environment and rising investment, as well as oil importers such as Kenya, Rwanda and Tanzania,” the World Bank said.