World Bank's International Development Association unit will be able to boost lending for clean water and energy projects, public health programs and aid to refugees
By David Lawder
WASHINGTON, Sept 22 (Reuters) - The World Bank division that lends to the world's poorest countries is preparing to raise billions of dollars from capital markets next year after winning top-tier, first-ever credit ratings from Moody's Investors Service and Standard and Poor's.
The World Bank said on Thursday that its International Development Association unit, funded entirely by donor countries since its founding in 1960, now would be able to leverage its balance sheet and boost lending for clean water and energy projects, public health programs and aid to refugees.
Axel van Trotsenburg, the World Bank's vice president for development finance, called IDA's move to tap capital markets a "paradigm shift for development finance" that could boost its lending resources by 50 percent over the amount of money raised in its current funding round this year to more than $75 billion.
"It will allow us to have a more ambitious replenishment for the next three years, and in turn, that will allow us to undertake critically needed investments in the 77 poorest countries," van Trotsenburg said.
Moody's and Standard and Poor's issued their highest triple-A ratings to IDA with stable outlooks. In its statement on Wednesday, Moody's cited IDA's strong capital base and high liquidity and its profile as a World Bank Group entity.
The bank's other main units, the International Bank for Reconstruction and Development and the International Finance Corp, already enjoy strong access to capital markets.
Timing for the first IDA bond issue is somewhat uncertain but would not occur before July 2017, van Trotsenburg said. That is when the money raised in the current round becomes available for lending, with negotiations over the total amount to be completed in December this year.
(Reporting by David Lawder; Editing by Diane Craft)
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