World Bank scraps loan fees, forecasts 10% price drop in commodities
The World Bank has introduced measures aimed at easing the borrowing burden for very poor and vulnerable countries.
These include removing the prepayment premium on the International Bank for Reconstruction and Development loans, providing a grace period for commitment fees on undisbursed balances, and extending low-cost pricing for small, vulnerable states.
Additionally, the World Bank forecasts a 10% drop in global commodity prices through 2026.
It said, “The bank is working hard to make it easier for countries to borrow and to pay back their loans more easily by removing some fees on IBRD loans.”
The reforms aim to alleviate financial pressure on countries in need of development financing.
They are part of the World Bank’s broader strategy to increase its lending capacity by $150 billion over the next decade.
The World Bank also explained that the adjustments to the IBRD’s equity-to-loans ratio, from 20% to 18%, will unlock an additional $70 billion in lending. This is alongside $10 billion from bilateral guarantees and $1 billion from the Asian Infrastructure Investment Bank.
These measures are designed to make borrowing easier and more affordable for countries facing significant challenges.
In a related development, the World Bank has projected that global commodity prices, while remaining higher than pre-pandemic levels, will decrease by nearly 10% from 2024 to 2026.
In its 2024 year in review report released on Thursday, the bank stated, “Unfortunately, this will do little to alleviate the pain of high food prices in developing countries where food-price inflation remains high, double that of advanced economies.
“In general, overall commodity prices will remain 30 percent higher than in the five years before the COVID-19 pandemic.”
The review titled “2024 Key Development Challenges in Nine Charts: How the World Is Off-Track to Reduce Poverty,” noted that after several years of multiple, continuous shocks, the global economy is finally showing signs of stabilising.
According to the report, despite the bleakest predictions, the world successfully avoided a global recession this year.
