As I’ve argued elsewhere there are now seven great giants blocking the path to achieving the sustainable development goals and the Paris Climate Change targets - extreme poverty, hunger, disease, lost learning, conflict, debt and climate change.
If we’re to tackle these issues, we need to transform the size and scale of green development finance. The best estimates are that we need to at least triple the lending through the multi-lateral development institutions, including the World Bank.
Now, there’s obviously lots to do ensuring we use the World Bank balance sheet and build new public private partnerships. But, a $20 billion increase in the Bank’s balance sheet would unlock an extraordinary $200 billion in additional lending over the next decade.
Britain could lead this argument! Our share of a $20 billion World Bank capital increase would be about $1 billion - paid in over five years, that’s $200 million a year.
Where could that come from? Well, there’s an easy answer. It could come from re-cycling the money we get back from the European Investment Bank, as part of the ‘Brexit dividend’.
As the House of Commons library sets out in its briefing The European Investment Bank, (Section 3.1), at the point when the UK left the EU, its paid-in capital in the EIB came to just under €3.5 billion. This money is to be paid back in twelve annual instalments, the first of which was paid in October 2020.
HM Treasury has published details on these payments in its annual European Union Finances documents.
The most recent edition, published in July 2022, says (in paragraph 2.42) that the second payment of €300 million from the EU was received during 2021.
We expect that these annual payments will continue, and that the final payment, covering the balance of €196 million, will be received on 15 October 2031.
Right now, the Treasury is just putting the money into the general pot: The money we got back in 2022 shows up as income of £259 million in HM Treasury’s Supplementary Estimate for 2022/23 (see p469, line item X, “EU Withdrawal Agreement Financial Settlement”, listed under capital income). But we could be recycling this money back into the World Bank transforming the size of its balance sheet and the supply of concessional lending it could provide.
If we want to lead the global debate on renewing ‘the sinews of peace’ we could. We should get on with it.