The United Kingdom has pledged £100 million to help developing countries tackle urgent development issues, such as climate change, food insecurity, pandemics, and poverty
On Wednesday, 17 April, the UK announced a £100 million hybrid capital contribution to boost the World Bank’s International Bank for Reconstruction & Development (IBRD), which will help tackle some of the world’s most pressing challenges in the next decade.
The World Bank’s financial model means for every £1 it receives it can lend £10. The UK’s contribution of £100 million will unlock ten times as much lending £1 billion to tackle issues such as climate change, food insecurity, pandemics, and poverty in the next decade and help achieve the UN’s Sustainable Development Goals.
Hybrid capital is a financial innovation that allows World Bank shareholders, including the UK, to significantly expand the IBRD’s lending capacity through unilateral voluntary contributions of new funds at any time.
Deputy Foreign Secretary and Minister for Development and Africa Andrew Mitchell said: Our pledge of £100 million for hybrid capital, which will unlock £1 billion of additional financing capacity over the next decade, recognises the need for urgent action to deliver real impact.
Over half of low-income countries are at high risk of debt distress and unable to access affordable finance to grow their economies. At the same time, shifting the dial on the UN’s Sustainable Development Goals and tackling global challenges, such as climate change, requires significantly higher volumes of finance.
The UK is one of the first countries to make a hybrid capital contribution to the World Bank and is working in close coordination with its G7 partners to achieve the shared goal of building a bigger and better World Bank.
Hybrid Capital combines features of both debt and equity. It takes the form of a loan with no stated maturity date that pays a coupon (annual interest payment) and usually has no voting rights (ie it does not impact on the shareholding of the MDB)
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