Canada Pledges US$200 Million to World Bank
Canada became the latest World Bank Group shareholder to invest in hybrid capital, a financial product designed to enhance the Bank’s lending capacity and support developing countries in achieving the U.N.’s Sustainable Development Goals.
Canada has pledged US$200 million to hybrid capital, which, when leveraged, will generate up to $1.6 billion in additional lending capacity over the next decade. This announcement follows a similar commitment in April, when 11 countries pledged more than US$11 billion to hybrid capital and a new Portfolio Guarantee Platform. With Canada’s contribution, these funds could create over US$70 billion in additional lending capacity over the next ten years.
“Canada’s generosity will help finance critical development priorities such as the energy transition, stronger health systems, protecting biodiversity, and much more. Our members are meeting the moment with critical resources to drive impact and build a sustainable future on a livable planet,” said Ajay Banga, World Bank Group President.
Canada joins Denmark, Germany, Italy, Latvia, the Netherlands, Norway, and the United Kingdom in committing to hybrid capital. Meanwhile, Belgium, France, Japan, and the United States have pledged to the Portfolio Guarantee Platform.
Hybrid capital is a new subordinated debt instrument with unique leveraging potential, and the Portfolio Guarantee Platform provides a shared risk approach that makes World Bank financing more accessible. These products are part of a series of reforms recommended by the G20’s Independent Panel for Review of Multilateral Development Banks (MDBs) Capital Adequacy Frameworks (CAF). Another measure includes adjusting the Bank’s loan-to-equity ratio, which expands financial capacity by US$40 billion over ten years. Increasing the bilateral guarantee limit has added an additional US$10 billion.
