Japan has entered into a $1 billion portfolio guarantee agreement with the World Bank, aimed at increasing financing for projects that tackle global challenges. The agreement was signed on Friday and is expected to enhance 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." Banga signed the agreement alongside Japan’s Finance Minister Katsunobu Kato.
The newly established Portfolio Guarantee Platform allows Japan's $1 billion commitment to facilitate an additional $6 billion in funding over a decade. This platform enables 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 new financial instruments, which include hybrid capital. These collective efforts could potentially expand World Bank lending by over $72 billion within ten years.
For further information, contacts are available: Sue Pleming at (202) 981-8929 or spleming@worldbank.org and David Young at (202) 473-4691 or dyoung7@worldbankgroup.org. More details can be found on their website and social media platforms.