A new World Bank president is supposed to be appointed by the end of June, after the resignation of David Malpass, who has faced criticism for his inaction on climate change.
US Treasury Secretary Janet Yellen announced in an exclusive interview with Agence France-Presse that reforming the World Bank would allow it to grant additional loans worth $50 billion to countries that need it over ten years.
Yellen said in an exclusive interview before the start of the World Bank and International Monetary Fund Spring Meetings starting Monday that the reform would enable the World Bank to “expand its financial capacity.”
She added that the amendments “may lead to an additional lending capacity of $50 billion over the next decade, which is a major increase in resources,” noting that this would represent “a 20% increase in the level of sustainable lending for the International Bank for Reconstruction and Development,” a subsidiary of the World Bank. .
She stated that announcements in this regard will be issued next week during the spring meetings of the two financial institutions.
The reform of the World Bank began in October, prompted by some member states, led by the United States, and the aim is to enable the institution that emerged nearly 80 years ago from the Bretton Woods conference in July 1944 at the end of World War II, to better respond to the needs of developing countries in terms of financing.
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Separately from the value of the amounts involved in reform, Yellen pointed out that the World Bank’s mission will be updated “so that, in addition to strengthening resilience to climate change, epidemics and conflicts.”
And she stressed that “these challenges are not separate or conflicting, but are interdependent so that they cannot be separated.”
It is expected, according to Yellen, that another announcement will be issued during the spring meetings of the two institutions, stating that “the bank’s business model will be updated to direct it towards the goals we set.”
“This includes a range of issues,” she added, including “integrating international challenges into diagnostic tools, partnership strategies with countries or a framework aimed at results, and creating more incentives to mobilize national and private capital.”
She said it was “the beginning of a reform mechanism,” expressing her hope that other mechanisms would be adopted “by the end of the year,” with announcements to be made in this regard “during the upcoming meetings of the Group of Twenty and the annual meeting of the International Monetary Fund and the World Bank in Morocco” next fall.
And I expected that other development banks would then embark on a process of transformation as well.
On the other hand, a new head of the World Bank is supposed to be appointed by the end of June, after the resignation of David Malpass, who was criticized for his inaction on climate change.
The name of his successor will not be known before the beginning of May, but there is only one candidate for this position, Ajay Banga (63 years), an American of Indian origin who was nominated by the United States, and has experience in private and public projects.
Yellen commended the “solid foundation” that Malpass has provided for the World Bank.
“I assume that Ajay Banga will be elected president and he will continue this mechanism,” she said. “I think he understands how managing these global challenges is closely linked to eradicating extreme poverty, and will show the ability to steer the World Bank in a new direction.”
Among the important topics that will be discussed next week in Washington is the restructuring of sovereign debts for poor countries that borrowed to be able to pay the costs of fighting the Covid-19 epidemic and are now facing an increase in debt service with higher interest rates.
“There will be a meeting on sovereign debt next week,” Yellen said.
Among the major creditors is China, which is accused of not being responsive to debt restructuring efforts. But Yellen said: “We have seen a certain movement on the part of China regarding participation in Sri Lanka’s debt restructuring, which is a sign of hope.”
