(Washington) The reform of the World Bank (WB) should allow it to lend an additional 50 billion dollars over ten years to countries in need, US Treasury Secretary Janet Yellen told AFP in an interview. exclusive.
Thanks to this development, the WB “extends its financial capacity”, said Joe Biden’s Secretary of Economy and Finance, while the spring meetings of the IMF and the World Bank are taking place on Monday in Washington.
The changes “could lead to an additional $50 billion in lending capacity over the next decade, […] a significant increase in resources”, she detailed, stressing that this represented “a 20% increase in the level of sustainable lending from the IBRD”, the International Bank for Reconstruction and Development, a subsidiary of the World Bank.
Announcements will be made next week at the spring meetings of the International Monetary Fund (IMF) and the World Bank, she said.
This reform of the World Bank was launched in October, at the instigation of certain member countries, in particular the United States. At almost 80 years old, the institution, which emerged from the Bretton Woods conference of July 1944, at the end of the Second World War, must indeed better meet the financing needs of developing countries.
“Beginning of a process”
And beyond the amounts, the World Bank will see its mission updated, “to add the strengthening of resilience against climate change, pandemics, conflicts”, underlined Janet Yellen.
“These challenges are not separate or contradictory, but rather inextricably linked”, she insisted, and another announcement should take place during the spring meetings of the IMF and the World Bank: “The operating model of the bank will be updated to orient it towards the objectives that we set for ourselves”.
“This includes a variety of things,” the secretary detailed, referring to “integrating global challenges into diagnostic tools, country partnership strategies or the results-based framework and creating more incentives for the mobilization of national and private capital”.
This is the “beginning of a reform process”, welcomed Mme Yellen, who hopes to see more “by the end of the year”, with announcements “at the next meetings of the G20 and the annual meeting of the IMF and the World Bank in Morocco” in the fall next.
The other development banks should then also begin their transformation.
Debt and Ukraine
In parallel, the World Bank will also change its president by the end of June, after the resignation of David Malpass. The lack of consideration of climate change had often been criticized.
The name of his successor should not be known until early May. However, only one candidate is in the running: Ajay Banga, 63, an American of Indian origin, presented by the United States. He notably highlighted his experience in public-private projects.
Janet Yellen praised the “solid base” provided by David Malpass.
“I assume that Ajay Banga will be elected president, and he will continue this process. And I believe he understands how managing these global challenges is inextricably linked to ending extreme poverty, and will show an ability to steer the World Bank in a new direction,” she said. .
Another important topic to be discussed in Washington next week is the restructuring of sovereign debt for poor countries, which had borrowed to meet COVID-19-related expenses and are now seeing interest rise as rates rise.
“There will be a meeting of the global roundtable on sovereign debt next week,” commented Janet Yellen.
Among the main creditors is China, which is accused of a lack of will to successfully restructure these debts. However, “we have seen some movement from China regarding participation in Sri Lanka’s debt restructuring, which is a sign of hope”, welcomed the Treasury Secretary.
“We have technical discussions” in which the Middle Kingdom “has participated”, she said, assuring that the countries continued “to put pressure on China for improvements”.
Economic support for Ukraine will also be discussed.