Shutdown: How Covid Shook the World's Economy

by Adam Tooze

Since 1959 the International Bank for Reconstruction and Development (IBRD), the part of the World Bank organization that makes loans to low- and middle-income countries, had enjoyed a triple-A credit rating. On April 15, 2020, the day of the G20 agreement on the DSSI, the IBRD was in the market raising $8 billion in five-year bonds, at a yield of 0.704 percent. It was the largest and cheapest fundraising exercise ever undertaken by an international financial institution.34 The reason the World Bank did not join the Debt Service Suspension Initiative was that making concessions to its borrowers, taking a loss on its balance sheet, however small, might have jeopardized the IBRD’s triple-A-plus rating and thus put in danger its ability to make low-cost loans to the poorest countries.35 The World Bank’s answer to the crisis was not to suspend or defer existing debt, but to offer $160 billion in new lending capacity through to the summer of 2021.