In what re-affirms the growing economic cooperation between India and the US, the World Bank has raised its single-country loan exposure limit for India. The Bank has raised its single borrower limit (SBL) for India to $17.5 billion from $15.5 billion.
This comes after more than a year of negotiations between New Delhi and Washington. SBL refers to the cumulative amount disbursed to a country and not yet repaid. A World Bank spokesperson told FE that the SBL for India has been raised to $17.5 billion. A top government official said the hike in SBL has come especially for India and is a reflection of the deepening ties between the two nations.
Finance minister Pranab Mukherjee and Planning Commission deputy chairman Montek Singh Ahluwalia have been negotiating with the World Bank for increasing the SBL.
During his visit to India last week, World Bank Group president Robert Zoellick agreed to extend a $1.5 billion loan to India for building 24,000 km of all-weather roads ? the largest rural roads project approved by the Bank?s board. Mukherjee also acknowledged Zoellick?s efforts in ensuring higher SBL for India, the government official said. Zoellick also agreed to provide $225 million for supporting a programme to mitigate the impact of cyclones.
Although the bank follows single country exposure limits, it does not have any annual ceilings on the amount that it can lend to a country. ?No. there is no (annual) limit. For IDA (International Development Association) money, known as credits, there is a three-year ceiling on commitments based on donor contributions to the relevant IDA cycle. For the International Bank for Reconstruction and Development (IBRD) money, known as loans, there is no limit to the annual amount,? a Bank spokesperson said. Last year, the Bank earmarked $3 billion to support India in mitigating adverse impact of the global economic crisis. This included a $2-billion package for recapitalisation of public sector banks.
World Bank has lent around $85 billion as of December 2010 to India for over 500 projects. Of this, IBRD loans amount to $45 billion while IDA credits stood at $40 billion. While IDA credits are interest free, IBRD extends long-term loans at low interest rates.