US welcomes World Bank reforms, pushes for more ambitious changes

The United States on Monday welcomed World Bank plans to raise annual lending to middle-income countries by $5 billion over a decade to fight climate change and other global crises, but said it would soon push for more ambitious changes.

A senior U.S. Treasury official told Reuters World Bank governors will approve the long-awaited plan at their semiannual meeting next week and call on the bank’s board to develop clear plans for reforms.

The United States, the bank’s largest shareholder, has been pushing the World Bank for months to be bolder and allocate more resources to help developing countries tackle climate change, future pandemics and other global challenges.

The World Bank has earmarked $100 billion for global public goods for the period 2020-2022, but estimates that developing countries and the private sector will need to spend $2.4 trillion more annually to meet those needs.

“We have to keep the ambition high. There’s a lot more to do,” the official said, urging Bank of America to outline concrete additional reforms, along with a timetable for implementation.

The Biden administration sees the bank’s “growth roadmap” as the “first down payment on a series of major reforms,” ​​but wants more reforms implemented as soon as possible, rather than waiting for the bank’s governors to meet in October. Officer.

“We want the bank to prepare a work plan for additional reforms with a timeline for identification, discussion with the board and eventual implementation.

The plans, which will be approved next week, will increase the lending capacity of the Bank for International Reconstruction and Development, its middle-income lending arm, by about 20%.

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The lion’s share of this is moving towards a percentage point reduction in the bank’s equity-to-loan ratio to 19%, hybrid capital provision, bilateral shareholder guarantees and amendments to its statutory debt covenant.

The bank is updating its terms of reference to make clear that tackling global challenges is “integral to the bank’s dual mission of ending extreme poverty and promoting shared prosperity.” .

At the same time, the bank is using its balance sheet to raise more private capital, the official said.

Washington continues to urge the Bank to implement the recommendations of an independent panel appointed by the Group of 20 major economies that the World Bank and other multilateral development banks (MDBs) could free up hundreds of billions of dollars by easing their capital requirements.

“We will continue to ask for more,” the official said.

U.S. officials are promoting reform with other MDBs, including the Inter-American Development Bank, which held closely coordinated activities at its annual meeting, including a push for private capital.

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