ISLAMABAD, Oct 23 (ABC): Global development financing is gaining momentum as the World Bank Group mobilised a record $112 billion in private capital during fiscal year 2026. The increase reflects growing international efforts to attract investment into developing economies facing high borrowing costs and limited public resources.
The amount represents more than a threefold increase from $35 billion in FY2022. Combined with the World Bank Group’s own resources, total financing and capital mobilisation for developing economies exceeded $200 billion in FY2026.
The institution also issued more than $25 billion in guarantees. As a result, it surpassed its previous target of reaching $20 billion in annual guarantee issuance by 2030, four years ahead of schedule.
Meanwhile, its financing through loans, grants, equity investments and guarantees reached $123.5 billion during FY2026.
Private capital mobilisation also increased across middle-income economies and Africa.
In lower-middle-income countries, the amount rose from $14 billion in FY2022 to $37 billion in FY2026. Similarly, upper-middle-income economies attracted $50 billion, compared with $12 billion four years earlier.
Africa also recorded substantial growth, with private capital mobilisation increasing from approximately $9 billion to $22 billion over the same period.
Dr Uzma Zia, Senior Research Economist at the Pakistan Institute of Development Economics (PIDE), told Wealth Pakistan that development institutions were increasingly using their resources to attract private investment.
She explained that the emerging financing model focused on mobilising additional capital rather than relying exclusively on conventional sovereign lending.
“The important shift is that development institutions are trying to use their capital more strategically. Guarantees, co-financing and risk-sharing mechanisms can make projects in developing economies investable for institutions that might otherwise consider the risk too high,” she said.
Zia noted that this approach could benefit developing countries facing major infrastructure requirements but lacking sufficient fiscal capacity to finance large projects through additional public borrowing.
According to her, guarantees and risk-sharing arrangements could encourage private investors to support projects that might otherwise appear too risky.
Consequently, developing economies could diversify their financing sources and reduce their dependence on government borrowing.
“The advantage of blended financing is that public and multilateral institutions can absorb or reduce some risks while private investors provide additional capital. That can potentially extend maturities, lower financing costs and make projects in infrastructure, energy and productive sectors easier to fund,” she said.
World Bank expands guarantees and co-financing
The World Bank Group is also strengthening cooperation with other multilateral development banks to expand financing opportunities.
At the 2026 Annual Meetings, World Bank Group President Ajay Banga said the co-financing pipeline had tripled in two years.
The pipeline now includes approximately 250 projects seeking $138 billion in financing.
In addition, balance-sheet reforms have created more than $100 billion in potential additional lending capacity for the International Bank for Reconstruction and Development (IBRD) over the coming decade.
These measures aim to make better use of existing multilateral resources while attracting additional private investment.
The International Monetary Fund (IMF) is separately maintaining concessional financing channels for lower-income economies facing external financing pressures.
Its Poverty Reduction and Growth Trust (PRGT) is expected to maintain a self-sustaining annual lending capacity of approximately SDR 2.7 billion.
However, demand for PRGT financing could reach SDR 3 billion to SDR 5 billion annually during 2026 and 2027.
The expansion of development financing comes amid a challenging global economic environment.
World Bank projections released during 2026 indicate slower growth in developing economies, partly because of elevated energy costs, inflation and expensive external financing.
These pressures have increased the importance of attracting long-term investment without placing additional strain on public debt.
For countries with limited fiscal resources, guarantees, co-financing and private capital mobilisation could provide alternative ways to finance infrastructure, energy and productive economic activities.
Pakistan could benefit from expanding investment opportunities
Zia cautioned that greater availability of international financing would not automatically translate into higher investment in every developing economy.
She said countries needed stronger regulatory frameworks, better project preparation and credible institutions to attract long-term capital.
“More global capital becoming available does not automatically mean it will reach every developing economy. Countries need transparent regulation, bankable projects and credible institutions. Those that can combine these conditions with multilateral risk-sharing mechanisms will be in a much stronger position to attract long-term investment,” she said.
For Pakistan, the expanding development financing framework could create opportunities to attract investment in infrastructure, energy and other productive sectors.
In particular, commercially viable projects supported by multilateral guarantees could encourage greater private-sector participation.
However, Pakistan would need to strengthen its capacity to prepare projects that meet international financing requirements.
Transparent regulations and effective coordination among government institutions, development partners and private investors would also be essential.
Moreover, well-designed financing arrangements could help Pakistan attract long-term capital while limiting additional pressure on public finances.
The World Bank Group’s record private capital mobilisation highlights a broader shift in international development financing.
Instead of relying solely on conventional lending, multilateral institutions are increasingly using guarantees, co-financing and risk-sharing arrangements to attract private investment.
For developing economies, this approach could help bridge the gap between limited public resources and the substantial capital required for infrastructure development.
Experts believe countries with credible institutions, bankable projects and effective investment frameworks will be better positioned to benefit from these opportunities.
For Pakistan, stronger project preparation and improved investment conditions could help translate expanding global development financing into sustainable economic growth.
