The figure is double what the agency initially said it would give to its unit in charge of distributing funds. New World Bank president Robert Zoellick said the move was designed to encourage rich countries to increase their donations. He also reduced the charges on loans to emerging countries, such as China, for the first time in nine years.
“The board agreed to vastly simplify and do away with most of the fees and waivers and just have an upfront commitment fee and a spread over our borrowing, which will enable us to cut prices back to 1998 levels,” Mr Zoellick said.
The dramatic step is part of the World Bank’s strategy to increase its business with 79 nations classified as middle income, including India, Brazil, Russia and South Africa and get them to help with poverty-fighting efforts. Meanwhile, Mr Zoellick warned that if the Group of Eight industrialised nations stuck to their promise made in 2005 to cancel the debts of the world’s poorest countries, a shortfall was likely to emerge in the World Bank’s aid pot.
He urged developed countries to increase their donations so as to help impoverished economies invest in their infrastructure and become sustainable, and not leave them to rely on money from countries that do not have their best interests at heart.