- Guarantee will free up additional financing to support crucial projects
WASHINGTON, USA – Japan signed a $1 billion portfolio guarantee agreement on Friday that will scale up financing from the International Bank for Reconstruction and Development for projects that address global challenges.
“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,” said World Bank Group president Ajay Banga, who signed the agreement with Japan’s finance minister Katsunobu Kato.
The guarantee falls under a new Portfolio Guarantee Platform with leveraging ability that allows Japan’s $1 billion commitment to enable new funding of $6 billion over ten years. The platform permits shareholders with high credit ratings to step in if a borrower fails to pay back a loan from the International Bank for Reconstruction and Development (IBRD), a member of the World Bank Group.
Japan is joined by 14 other countries in pledging commitments to new World Bank financial instruments, which also include hybrid capital. These commitments could potentially expand World Bank lending by more than $72 billion over ten years.