Exclusive World Bank seeks more funds to tackle climate change and other crises – document

0 18

By David Lawder

WASHINGTON (Reuters) – The World Bank is keen to significantly expand its lending capacity to tackle climate change and other global crises and, according to an “evolution”, will negotiate proposals with shareholders before its April meetings which include a capital increase and new. Loan instruments roadmap” seen by Reuters on Monday.

The roadmap document, which will be sent to shareholder governments, marks the start of a negotiation process to change the Bank’s mission and financial resources, moving away from a specific lending model for the country and the project that has been used since its inception at the end of the Second World War was used.

According to the document, the leadership of the World Bank aims to have concrete proposals to change its mission, operating model and financial capacity ready for approval by the Bank’s joint Development Committee World and the International Monetary Fund in October.

A World Bank spokesperson said the document aims to provide details on the scope, approach and timetable for development, with regular updates to shareholders and decisions throughout the year.

AAA CLASSIFICATION TO STAY

The development lender will explore options such as a potential new capital increase, changes in its capital structure to free up more credit, and new financing tools such as private sector loan guarantees and other ways to mobilize more private capital, according to the document.

However, the World Bank Group (WBG) is not ready to give in to calls from some non-profit organizations to abandon its long-standing flagship credit rating in a bid to boost lending, and states: “The management will explore all the options that increase the capacity of the WBG while maintaining it. .” of the AAA rating of WBG companies.”

US Treasury Secretary Janet Yellen has called on the World Bank and others to review their business models to boost lending and use private capital to finance investments that benefit the world at large. , such as helping middle-income countries with a Transition from coal energy.

A spokesman for the US Treasury Department declined to comment on the World Bank document.

The bank said proposals being considered include higher legal credit limits, lower equity requirements for loans and the use of leveraged capital — money pledged but not paid out by member governments — for the loan.

Development experts say that this change significantly increases the level of borrowing compared to the current capital structure, which only uses paid-up capital.

“The challenges facing the world require a massive increase in support from the international community,” the bank said in the document. “For the WBG to continue to play a central role in development and climate finance, a concerted effort by shareholders and management is needed to increase the financing capacity of the WBG.”

INSUFFICIENT FUNDING

The roadmap document warns that increased lending for climate change, health care, food security and other needs may require increased capital to expand the capacity of -the middle-income lending arm of the World Bank, the International Bank for Reconstruction and Development (IBRD).

The IBRD’s $13 billion capital increase in 2018 “was intended to be prepared for one medium-sized crisis per decade rather than multiple and overlapping crises,” including the coronavirus pandemic. COVID-19, the war in Ukraine and the effects of accelerating climate change, the document said. The IBRD crisis buffers are expected to be used by mid-2023, he said.

Another option, the roadmap says, is for the World Bank’s shareholder countries to increase regular contributions to the fund of the world’s poorest countries, the International Development Association (IDA). which have decreased in recent years despite increasing needs.

The roadmap also offers an opportunity to create a new concessional lending trust for middle-income countries, focused on global public goods, with a structure similar to IDA, with regular increases in funds that would be separated from the capital structure of the Bank.

“Such a fund could attract bilateral donor funding that is separate from shareholder budget lines in support of the WBG, and could involve non-shareholder donors,” the bank said.

The bank said that the development of its mission to increase lending for climate change while maintaining good results for development will require additional human and budgetary resources, which decreased by 3% in real terms during the -the last 15 years.

(Reporting by David Lawder; Editing by Grant McCool)

Source

Leave A Reply

Your email address will not be published.