The World Bank Group faces ongoing difficulties in increasing private capital financing for low-income countries, according to recent analyses. Despite a general expansion in the World Bank’s guarantee platform, which aims to mobilize private investment for developing nations, funding for low-income countries has remained steady at around $3 billion, highlighting a persistent challenge as international aid budgets tighten.

Ajay Banga, the World Bank president, has recognized the critical need to attract more private investment to the world’s poorest nations. A new study from the Paris-based policy think tank Finance for Development Lab suggests that optimizing the bank’s policy-based guarantee mechanisms could help address this issue. The guarantees are intended to encourage private sector financing by partially covering risks but have disproportionately benefited upper-middle-income and high-income countries.

Data shows that almost two-thirds of sovereign policy-based guarantees issued have gone to countries with higher income levels. Rwanda stands as the sole low-income country recipient of these guarantees, accounting for only 9.5 percent of total issuances. This distribution arises in part due to current eligibility criteria, which exclude countries experiencing high risk of debt distress without sufficiently distinguishing between solvency issues and temporary liquidity challenges.

Pricing structures also disadvantage poorer nations. For instance, Rwanda has reportedly been charged guarantee fees 2.5 times higher than Argentina, despite maintaining a stronger credit rating. Experts suggest that adjusting eligibility rules to include countries facing liquidity pressures—where debt levels are still sustainable—could broaden access to financing. This might include nations emerging from debt restructuring processes.

Additionally, the World Bank could consider offering more affordable guarantee terms supported by donors and philanthropy to ease cost burdens on low-income countries. Proposals have also highlighted the potential benefits of increased flexibility in debt-for-development swaps, which could allow governments to redirect savings from debt refinancing toward essential public services. Partnerships with organizations such as the Global Fund, Unicef, and the World Food Programme are seen as key channels for such efforts.

Advocates argue that these targeted reforms could extend the reach of the World Bank’s guarantee platform without requiring additional shareholder capital or compromising the institution’s financial safeguards. These changes may be particularly important as many low-income countries confront growing pressure on health and development spending amid reductions in international aid.