World Bank Group Welcomes Strong Support for $5b Local Currency Bond Fund Designed to Boost Investment in Emerging Markets
The World Bank Group today welcomed the strong support received from emerging markets for its local currency bond fund. The $5 billion bond fund is designed to help emerging market countries attract more investment by developing their local currency bond markets.
The Global Emerging Markets Local Currency Bond Fund (GEMLOC) has been created to help drive financial sector development in emerging markets, boost prospects for growth, and help overcome poverty. It is a joint initiative by the International Bank for Reconstruction and Development (IBRD) and the International Finance Corporation (IFC), members of the World Bank Group.
“The interplay between the fund, the index, and advisory services funded by investors, creates an exciting opportunity for countries to develop their local currency bond markets and attract long-term investment. We particularly welcome the focus on smaller markets, which stand to benefit greatly from stronger debt markets and the increased investment they will attract as they become easier to invest in,” said H.E. Dr. Mahmoud Mohieldin, Minister of Investment, Egypt, speaking at a press conference held in Washington, D.C. during the World Bank Group’s Annual Meetings.
Jorge Familiar C., Executive Director, Central America, Mexico, Spain, and Venezuela, the World Bank Group, said: “I applaud GEMLOC for its ingenious approach to encouraging financial development through market-based initiatives. This project demonstrates that the World Bank Group has a unique role to play in addressing market gaps, bringing public and private sectors together to meet the demands of both, and meeting the needs of middle-income as well as poorer countries.”
“This effort will enhance the ability of governments and other issuers to raise long-term financing in local currencies and attract benchmarked investors to their debt markets. This would contribute towards greater financial stability and economic growth. GEMLOC should encourage a positive shift from short-term inflows towards stable, long-term investment in local bond markets,” said Tan Sri Dr. Zeti Akhtar Aziz, Governor, Bank Negara Malaysia.
“We are delighted with the resounding support the World Bank Group has received for this initiative,” said Michael Klein, Vice President, Financial & Private Sector Development, WB-IFC and Chief Economist, IFC. “This is testament to the importance of financial sector development as a means to boosting economic growth and reducing poverty. This strategic partnership with the private sector also represents a new business model for the World Bank Group”.
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