The United States on Monday welcomed World Bank plans to increase annual lending to middle-income countries by $5 billion to fight climate change and other global crises over a decade, but indicated that they would push for more far-reaching changes to be implemented soon.
A senior US Treasury official told Reuters that World Bank governors are expected to approve the long-awaited plan at their biannual meeting next week, while asking the bank’s management to present firm plans for further reforms. .
The United States, the World Bank’s largest shareholder, has been urging it for months to take bolder action to increase financing to help developing countries deal with climate change, future pandemics and other disasters. other global challenges.
The World Bank has earmarked $100 billion between 2020 and 2022 for global public goods, but it estimates that developing countries and the private sector would need to spend much more — $2.4 trillion a year — to meet these needs.
“We must remain ambitious. There is still a long way to go,” the official said, adding that the United States was pressuring the bank to come up with concrete additional reforms, along with a timetable for implementation.
The Biden administration sees the bank’s ‘roadmap for evolution’ as a ‘first installment in a series of important reforms’, but it wants further reforms to be implemented as soon as possible, without waiting for the meeting of the bank’s governors in October, the official said.
“We would like the bank to establish a work plan for additional reforms, as well as a timetable for their identification, discussion with the board and their implementation, and we would like to see this done on an ongoing basis. “, they said.
Plans to be approved next week will increase the lending capacity of the Bank for International Reconstruction and Development, its arm for lending to middle-income countries, by about 20 percent, the senior official said, calling the sum ” real money”.
The lion’s share of this increase came from a one percentage point reduction in the bank’s equity-to-loan ratio to 19%, moves to issue hybrid capital, bilateral shareholder guarantees and adjustments of its statutory loan agreement.
The bank is also updating its mission statement to clarify that solving global problems is “an integral part of the bank’s twin goals of ending extreme poverty and fostering shared prosperity,” while refocusing its diagnostic tools to ensure that these issues are taken into account in its programs.
In due course, it is working to leverage its balance sheet to raise more private capital, the official said.
Washington continues to press the Bank to implement the recommendations of an independent group commissioned by the Group of 20 major economies, which said the World Bank and other multilateral development banks (MDBs) could free up hundreds of billions of dollars by relaxing their capital requirements.
“We will continue to ask for more,” the official said.
U.S. officials are also working closely with other multilateral development banks to advance reforms, including the Inter-American Development Bank, which adopted very similar measures at its annual meeting, including an incentive to increase private capital.
