Seventy-five years ago today, the newly established International Bank for Reconstruction and Development (IBRD), now known as the World Bank, made its first and only loan to Luxembourg. The loan was IBRD’s fourth loan, laying the foundation for Luxembourg’s steel industry and playing a key role in supporting the country’s economic recovery in the aftermath of World War II.
The loan, officially dated August 28, 1947, was for US$12 million, equivalent to approximately US$155 million (€ 152 million) today, to support Luxembourg’s Steel Mill Railway Project. The money financed rolling stock for the railways and equipment for the steel industry: US$4.5 million were used to purchase locomotives, box and gondola freight cars, baggage cars and miscellaneous railroad equipment; and US$ 7.5 million to purchase a modern reversing steel strip mill, which enabled the country to produce high-quality finished products using modern methods. This laid the foundation for Luxembourg’s steel industry, which helped the country to a new upswing.
The funds provided by the World Bank were a small fraction of the external finance needed for recovery, but they helped keep Luxembourg afloat until the Marshall Plan became operational in 1948. By 1974, Luxembourg had paid of its loan and never returned as an IBRD borrower. Today, Luxembourg is a key development partner to the World Bank, supporting the development priorities shared with the institution’s 188 other member countries including climate, debt, poverty reduction, health, education and private sector development.
As a donor Luxembourg is one of the very few countries that allocates 1% of its gross national income to Official Development Assistance. Working with the World Bank generates results that improve lives in low- and middle-income countries around the world.
Luxembourg’s World Bank Governor, Minister of Finance, Yuriko Backes, comments: “Over the past 75 years Luxembourg has evolved from a recipient country to a donor country that makes great efforts to support the World Bank’s goals. Thanks to the economic boom, Luxembourg, a founding member of the European Union, while remaining a major steel producing country, has diversified its economy, and today hosts one of the world’s leading financial centers with a strong focus on green, social and sustainable bonds and the second largest fund center in the world after the US.”
President of the World Bank Group, David Malpass, said: “Amid the multiple crises facing Europe and the world, today’s anniversary of the World Bank’s first and only loan to Luxembourg in 1947 for reconstruction and steel production reminds us how countries can recover in the aftermath of conflict. We have enjoyed a strong partnership with the Government of Luxembourg, and I am grateful for their sustained support to IDA, our fund for the poorest.”