The Egyptian House of Representatives’ Economic Affairs Committee approved on Sunday a presidential decree for increasing Egypt’s authorized share of the International Bank for Reconstruction and Development’s (IBRD) capital stock.
During the committee’s meeting, a government representative said that the total increase of the World Bank Group’s authorized capital stands at US$200 million, with Egypt’s share of this increase representing about 26 percent, of which 6 percent is down payment paid, with the remainder on installments over 5 years.
The government said that the total optional increase stands at approximately US$149 million.
The World Bank Group’s shareholders endorsed in April 2018 a $13 billion paid-in capital increase, a series of internal reforms, and other policy measures that it said would “greatly strengthen the global poverty fighting institution’s ability to scale up resources and deliver on its mission in areas of the world that need the most assistance,” according to a press release from the World Bank Group.
The package, approved by the Development Committee of the Board of Governors, consisted of $7.5 billion paid-in capital for IBRD and $5.5 billion paid-in capital for IFC, through both general and selective capital increases, as well as a $52.6 billion callable capital increase for IBRD.
The boost in capital was offset by various reforms, including operational changes and effectiveness reforms, loan pricing measures, and other policy steps to create a stronger World Bank Group.
The World Bank Group also agreed in 2018 to alter IBRD’s lending rules to charge higher rates for developing countries with higher incomes, in order to discourage them from “excessive” borrowing, according to Reuters, which impacted costs for higher-middle-income countries like China.
The multilateral lender said at the time that the plan would lead to an increase in the group’s overall lending to nearly $80 billion in fiscal 2019 from about $59 billion in 2018, according to Reuters.
The last World Bank capital hike happened in 2010.
IBRD is one of the five World Bank Group institutions and functions as its main concessional lending arm. Also among the institutions included in the World Bank Group are the International Development Association (IDA); the International Finance Corporation (IFC), a commercial-terms lender; the Multilateral Investment Guarantee Agency (MIGA); and the International Center for Settlement of Investment Disputes (ICSID).
These institutions work together in more than 100 countries, provide financing, financial guidance, and other solutions enabling countries to address challenges associated with development.
Edited translation from Al-Masry Al-Youm