In a bid to make borrowing less burdensome and more affordable to very poor and vulnerable countries, the World Bank has announced the scrapping of several loan fees, even as it projected about 10 per cent drop in global commodity prices till 2026
The global development institution announced in its official X handle (formerly Twitter) the removal of the prepayment premium on the International Bank for Reconstruction and Development (IBRD) loans, a grace period for commitment fees on undisbursed balances, and extended low-cost pricing for small, vulnerable states.
IBRD is one of the members of the World Bank Group.
It said: “The bank is working hard to make it easier for countries to borrow and to pay back their loans more easily by removing some fees on IBRD loans.”
The reforms are designed to ease financial pressure on nations in need of development financing, and form part of the bank’s broader strategy to increase lending capacity by $150 billion over the next decade.
It further explained that this includes adjustments to the IBRD’s equity-to-loans ratio from 20 per cent to 18 per cent, unlocking $70 billion in additional lending, alongside $10 billion from bilateral guarantees and $1 billion from the Asian Infrastructure Investment Bank.
These measures are designed to make borrowing easier and more affordable for countries facing significant challenges.
In a related development, the World Bank has projected that although they will remain higher than pre-pandemic, global commodity prices are to plummet by nearly 10 per cent from 2024 to 2026.
In its 2024 year in review report released on Thursday, the bank stated: “Unfortunately, this will do little to alleviate the pain of high food prices in developing countries where food-price inflation remains high, double that of advanced economies.
“In general, overall commodity prices will remain 30 percent higher than in the five years before the COVID-19 pandemic.”
The review titled “2024 Key Development Challenges in Nine Charts: How the World Is Off-Track to Reduce Poverty,” noted that after several years of multiple, continuous shocks, the global economy is finally showing signs of stabilising.
According to the report, despite the grimmest predictions, the world managed to avoid a global recession this year.
It stated: “However, while advanced economies have largely recovered, developing countries have yet to catch up. Low-income countries risk being left even further behind.
“The world faces a harsh reality: despite decades of progress, ending extreme poverty everywhere by 2030 is out of reach. Amid anemic economic growth, the lasting effects of the COVID-19 pandemic, crushing debt burdens, and rising fragility and conflict, the pace of reducing global poverty has effectively stalled.
“Devastating climate shocks and extreme weather threaten to slow or reverse progress even more.
“As we close out the year, here are some of the most pressing development issues countries faced in 2024 and how the World Bank Group is working with them to overcome these challenges.”
The Bretton Woods institution revealed that 1.2 billion people around the world face life-changing risks from climate-related hazards, such as floods, heat waves, droughts or cyclones.
Many of them, it explained, are in International Development Association (IDA) countries, where nearly half of the population is at high risk, adding that countries need a combination of more rapid development, more resilient development, and targeted adaptation interventions to reduce climate risks.
Global growth is expected to hold steady at 2.6 per cent in 2024 before edging up to an average of 2.7 per cent in 2025 and 2026.
Although this is promising, the World Bank stated that it is still well below the 3.1 per cent average in the decade before the COVID-19 pandemic. “Developing economies were projected to grow 4 per cent in 2024, slightly slower than in 2023. This means that between 2024 and 2026, countries that make up more than 80 percent of the world’s population and global gross domestic product would still be growing more slowly than they did in the decade before COVID-19,” the bank said.
Ndubuisi Francis
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