Demand for World Bank Lending
Bridging the external financing gap has been an important factor in borrowing cgovernment's demand for World Bank loans. The demand for IBRD and IDA lending is positively related to an increase in debt service payments and inversely related to...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2001/07/1552027/demand-world-bank-lending http://hdl.handle.net/10986/19573 |
| Summary: | Bridging the external financing gap has
been an important factor in borrowing cgovernment's
demand for World Bank loans. The demand for IBRD and IDA
lending is positively related to an increase in debt service
payments and inversely related to a borrowing country's
level of reserves. These two variables explain a large part
of the variation in IBRD and IDA lending commitments, not
only since the Asian crisis but also during tranquil times
over the past two decades. Borrowing to service debt during
a crisis is consistent with the Bank's role as a lender
of last resort as well as with its core development
objectives, but such borrowing during tranquil times may
conflict with the Bank's long-term objective of
reducing poverty. That investment lending commitments are
related to debt service payments implies that aid may be
more fungible than previously believed. If Bank lending is
fungible and there is no guarantee that a particular Bank
loan is financing an identified investment project or
program, a case could be made for greater use of
programmatic lending (with well-defined conditionality) As
developing countries become larger and more integrated with
volatile international capaital markets, there is also
likely to be a greater need for fast-disbursing, contingent
program lending facilities from the Bank. |
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