Japan has entered into a $1 billion portfolio guarantee agreement with the World Bank, aimed at enhancing financing for projects that tackle global challenges. The agreement was signed on Friday and is expected to boost funding from the International Bank for Reconstruction and Development (IBRD).
World Bank Group President Ajay Banga commented on Japan's initiative, stating, "Japan is leading the way in its support for new financial instruments that will make World Bank Group financing more widely available. By sharing risk, we can multiply our development impact." He signed the agreement alongside Japan’s Finance Minister Katsunobu Kato.
The newly established Portfolio Guarantee Platform allows Japan's $1 billion commitment to potentially generate $6 billion in new funding over a decade. This platform provides an opportunity for shareholders with high credit ratings to cover loans if borrowers default on their payments to the IBRD.
In addition to Japan, 14 other countries have pledged commitments to these innovative financial instruments, including hybrid capital. These pledges could expand World Bank lending by over $72 billion within ten years.
For further information, contact Sue Pleming at (202) 981-8929 or spleming@worldbank.org and David Young at (202) 473-4691 or dyoung7@worldbankgroup.org.