Treasury Secretary Janet Yellen told AFP that the World Bank’s ongoing reform could result in a $50 billion lending boost over the next decade, ahead of stakeholder meetings next week where key changes are expected to be announced.
Central bankers, finance ministers, and participants from more than 180 member countries are expected to convene in the United States capital next week for the International Monetary Fund and World Bank’s spring meetings.
The World Bank’s evolution will be a key topic of discussion, as there is a push for lenders to revamp and address global challenges such as climate change. The United States is the World Bank Group’s largest shareholder.
“I expect there to be an update of the bank’s mission to add building resilience against climate change, pandemics, and conflict and fragility to the core goals,” Yellen said in the interview with AFP Thursday.
She added that there needs to be a recognition that these challenges aren’t separate or conflicting but rather, inextricably linked.
“Second, there will be an announcement that the bank is stretching its financial capacity to meet these objectives, and adopting changes or endorsing changes that could result in an additional $50 billion in extra lending capacity over the next decade,” Yellen said.
The move would represent a significant resource boost, representing a 20% increase in the International Bank for Reconstruction and Development’s (IBRD) level of sustainable lending. The IBRD is the World Bank’s lending arm for middle-income countries.
– Seeking added reforms –
Yellen also said there would be an announcement on updating the bank’s operational model to “orient it towards the goals that we’re setting.”
Among other things, this includes creating more incentives for the mobilization of both domestic and private capital.
“We seek additional reforms during the rest of this year,” Yellen said.
The World Bank submitted an evolution plan in March, which will be discussed with its development committee on April 12 during its spring meetings.
Noting that World Bank President David Malpass has laid a “solid foundation” for the ongoing work, Yellen added that she expects US candidate Ajay Banga to be elected to the helm of the organization and continue the revamp.
Banga was the sole nominee for the position after Malpass announced this year that he would step down early.
– ‘Hopeful sign’ –
Also on policymakers’ agendas next week are support for war-torn Ukraine and debt restructuring.
“We have seen some movement by China on participating in debt restructuring for Sri Lanka, which is a hopeful sign,” Yellen said.
As global growth slows, the World Bank previously warned that the outlook is especially tough for the poorest economies — which face sluggish growth driven by heavy debt burdens and weak investment.
Yellen had earlier said that China should move more quickly on some debt restructurings.
Discussions on this front will continue next week as a newly formed global sovereign debt roundtable gathers, she told AFP.
“We’re having useful technical discussions on important elements of debt restructuring. China has been participating, and we all continue to press China for improvements,” she said.
Washington will continue pushing for a speedier and more predictable operation of the G20 “common framework” for debt restructuring as well.
On Ukraine, Yellen said: “Once again, we will work with all of our allies to insist that Russia cease its brutality in Ukraine.”
She added that the United States would press for economic support alongside its partners on this front.