Canada Pledges US$200 Million to World Bank’s Hybrid Capital
WASHINGTON, June 13, 2024—Canada has become the latest World Bank Group shareholder to invest in hybrid capital, a financial product designed to expand the Bank’s lending capacity for developing countries aiming to achieve the U.N.’s Sustainable Development Goals.
Canada pledged US$200 million to hybrid capital, which is expected to provide up to $1.6 billion in additional lending capacity over 10 years when leveraged. This announcement follows a similar commitment in April by a group of 11 countries that collectively invested more than US$11 billion in hybrid capital and a new Portfolio Guarantee Platform. With Canada’s contribution, this funding could generate an additional lending headroom of more than US$70 billion over the next decade.
“Canada’s generosity will help finance critical development priorities such as the energy transition, stronger health systems, protecting biodiversity and much more. Our members are meeting the moment with critical resources to drive impact and build a sustainable future on a livable planet,” said Ajay Banga, World Bank Group President.
Canada joins Denmark, Germany, Italy, Latvia, the Netherlands, Norway, and the United Kingdom in committing to purchase hybrid capital. Meanwhile, Belgium, France, Japan, and the United States have pledged support for the Portfolio Guarantee Platform.
Hybrid capital is described as a new subordinated debt instrument with unique leveraging potential. The Portfolio Guarantee Platform provides a shared approach to risk that makes World Bank financing more accessible. These products were developed following recommendations from the G20’s Independent Panel for Review of Multilateral Development Banks (MDBs) Capital Adequacy Frameworks (CAF). Other measures include adjusting the Bank’s loan-to-equity ratio to expand financial capacity by US$40 billion over 10 years and increasing the bilateral guarantee limit by an additional US$10 billion.
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