Posted by Oluyinka Akintunde, Abuja on
The World Bank has reduced its loan fees and raised the maximum amount it would lend to a single country by $1billion to $14.5billion.
The World Bank has reduced its loan fees and raised the maximum amount it would lend to a single country by $1billion to $14.5billion.
The bank confirmed this via a notice on its website on Monday, and said the Board of the bank had approved the decisions, which would affect countries borrowing from the International Bank for Reconstruction and Development, that lends to middle income developing countries.
According to the bank, the IBRD cut loan fees by 25 basis points (0.25 percentage points of the loan amount) by increasing the existing fee waiver from 50 to 75 basis points.
The reduction in loan fees, the bank noted, affects all loans presented to the World Bank board from July 1, 2005 to June 30, 2006.
The World Bank had in 1998, introduced its 100 basis point loan fee and first waived part of it in the year 2005 with the 50 basis point waiver.
It said, 'The borrowing limit increase was the first increase the institution has adopted since the previous single borrower limit of $13.5billion was set in 1997. It was motivated by a strengthened equity base together with improvements in the credit quality of IBRD's portfolio.
'IBRD's equity to loans ratio rose to 31.4 per cent in fiscal 2005 from 29.4 per cent when compared to the year before, while its loan loss provisions fell to $3.0billion from $3.5billion over the same period."
The World Bank lends to middle income countries on terms that are financially competitive when compared with other multilateral development banks.
The IBRD allocates about 40 per cent of its income to the International Development Association, an affiliate of the World Bank, which provides grants and subsidized loans to the poorest countries, as well as to the Heavily Indebted Poor Countries initiative.
For fiscal 2005, the World Bank's board has approved a transfer of $400million to IDA and $210million to HIPC.
The PUNCH, Tuesday, August 16, 2005