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World Bank plan to attract private investment in developing countries
World Bank President Ajay Banga praised China's remarkable progress over the past five decades as a testament to the possibilities of sustained development
World Bank expands data disclosure to attract private investment in developing countries / X/ @SpokespersonCHN
In a bid to bolster private sector investment in developing nations the World Bank is set to reveal more data, including insights into debt default. Speaking at the China Development Forum on Mar. 24, World Bank President Ajay Banga, highlighted the World Bank Group's achievement of mobilizing US$41 billion in private capital for emerging markets last year, with an additional US$42 billion raised through private sector bond issuance.
He stressed the need for further progress, noting that global economic growth in developing countries had slowed to around 4 percent from 6 percent over the past two decades. Banga underscored the impact of this slowdown, indicating that each percentage point decrease in growth could potentially push 100 million people into poverty, alongside rising debt levels.
Banga also emphasized a significant gap between the anticipated entry of 1.1 billion young people into the workforce within the next decade and the expected creation of only 325 million jobs. To address these challenges, the World Bank organized a focus group comprising 15 chief executives from asset management companies, banks, and operators, who identified concerns including regulatory certainty, political risk insurance, and foreign exchange risk.
As part of its reform efforts, the World Bank announced last month a restructuring of its loan and investment guarantee mechanisms, with plans to triple its annual guarantees to $20 billion by 2030. Starting next week, the bank, alongside a coalition of development institutions, will begin publishing private sector recovery data categorized by country income level, aiming to boost investor confidence.
Banga disclosed plans to release private sector default data segmented by credit rating, along with sovereign default and recovery rate statistics dating back to 1985. These initiatives align with the bank's overarching objective of attracting more private sector capital to drive economic impact and job creation in developing economies.
"All this work contributes to one goal: getting more private sector capital into developing economies to drive impact and create jobs," Banga said.
Banga praised China's remarkable progress over the past five decades as a testament to the possibilities of sustained development, highlighting the nation's achievements in job creation, poverty reduction, and emissions reduction. Notably, he acknowledged China's transformation from a major World Bank borrower to one of its largest donors.
In a longer-term strategy, Banga outlined efforts to establish a securitization platform that would facilitate the flow of institutional investors' US$70 trillion to emerging markets. By bundling large standardized investments into cohesive packages, the platform aims to encourage substantial investment at scale, streamlining the current fragmented landscape of small, customized loans.
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