IN BRIEF : World Bank Hikes Some Loan Rates
The World Bank is raising interest rates for more prosperous Third World countries to 7.65% annually, the first such increase since the bank began lending at variable rates in 1982, officials said today.
The rate will apply during the first six months of this year on $37 billion worth of loans to about 70 countries, said Sheldon Rappaport, a spokesman for the bank.
For the second half of 1988, the rate was 7.59%. The increase amounts to only 0.06% but will cost the borrowers an additional $11 million, Rappaport estimated. The rate is based on the cost of the bank’s own borrowings and will be recalculated in mid-1989. The bank gets most of its funds from borrowing on world markets.
The bank is owned by 151 governments, with the United States holding the largest block of shares, and is the biggest single source of aid to Third World countries to help raise their living standards. It lends more than $19 billion a year.
When it introduced variable interest rates on most of its loans in July, 1982, the annual rate was 11.43%. Since then, the rate has been reduced each time it was recalculated, twice a year.
The poorest countries, which borrow from the bank’s International Development Assn., will continue to get loans for 40 years at less than 1% a year, with long grace periods during which only interest is due.