Improving Financial Capacity and Sustainability

To ensure the availability of adequate resources that are aligned with the twin goals and its strategy, the World Bank Group is undertaking significant financial reforms that will increase its capacity to provide financial services to clients while strengthening its financial resilience. Through efforts to become more efficient and shore up its revenue base, the Bank Group will improve its financial sustainability and build a strong foundation for years to come.

Over the next decade, the World Bank Group will increase its financing capacity from an annual average of $45-50 billion to more than $70 billion. The additional financing is made possible by the record IDA17 replenishment, which will ensure IDA's lending capacity over fiscal 2015-17. On the revenue side, IBRD will strengthen its margins for maneuvering by increasing its single-borrower limit by $2.5 billion for Brazil, China, India, Indonesia, and Mexico, with a 50-basis-point surcharge on the incremental amount; lowering IBRD's equity-to-loan ratio percentage to reflect improvements in its portfolio credit quality; expanding the menu of loan maturities, including extending the maximum maturity; and restoring commitment fees on undisbursed balances.

A World Bank Group-wide expenditure review, which has identified cost-saving measures of at least $400 million on the annual cost base to be achieved over fiscal 2015-17, will result in increased lending capacity and budget flexibility and will optimize the cost structure of the Bank Group. The cost savings are being designed to ensure that the Bank Group's operational capacities and its ability to deliver services to clients will not be compromised. In addition, a new budget and strategic planning process—simpler and more flexible—is helping to align resources more directly with the World Bank Group strategy and twin goals. It focuses on promoting selectivity, linking budgets to results, and carrying out medium-term planning.

Increased collaboration among the four institutions of the World Bank Group will simplify procedures and reduce overlapping administrative functions while magnifying the development impact of its work with clients. One early example of collaboration is an innovative exposure swap between IBRD and MIGA of up to $100 million of principal that will enable each institution to do more business in Brazil and Panama.

An Agenda for Change

Other efforts to improve operations will continue beyond fiscal 2014. For example, in November 2013, the Board considered an outline of a new framework for procurement in World Bank investment project finance and endorsed a vision statement and principles to guide its implementation. The next phase will articulate details of the new policy and implementation. Work also continues on the review of the World Bank's safeguard policies, begun in 2012, to update the policy framework that helps avoid or mitigate harm to people and the environment. A second round of global consultations with stakeholders on the proposed new framework is planned for the second half of 2014.

Changes now under way across the World Bank Group are the most extensive and important in decades. They are intended to align all of the institutions' work with the twin goals within the context of its strategy. The result will be a Bank Group that is financially strong; a recognized leader in knowledge and talent; fast and responsive; internally integrated, globally connected, and locally engaged; and focused on achieving its goals of ending extreme poverty and boosting shared prosperity.

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