The World Bank seeks grants, new capital to fight global crises

The World Bank seeks grants, new capital to fight global crises

MANILA, May 23 (Reuters) – The World Bank will push for more grants and new capital from member countries even as it leverages its balance sheet to scale up lending for responses to climate change and other global crises, its chief operations officer said. on Tuesday.

The lender will pool donor support for a newly established crisis facility for the world’s poorest countries facing overlapping global crises, including severe climate events, Anna Bjerde said in an interview.

“We really hope to conclude and have a very strong interest in funding this before the end of the year,” Bjerde said, adding that several billion dollars were needed for the crisis facility.

This facility is located in the International Development Association (IDA) fund, the World Bank’s fund for the poorest countries. The last refill was quickly used up by the pandemic.

COVID-19 pushed many poor countries into debt distress as they were expected to continue servicing their obligations despite the massive shock to their finances.

Bjerde is hoping for major progress in courting interest in the facility at the annual meetings between the International Monetary Fund (IMF) and the World Bank in Morocco in October.

“We need to really get subsidies from developed and higher income countries, rich countries, to provide resource transfers to the lower income countries,” she said.

The World Bank, whose 25-member board elected a new president on May 3, wants to increase lending to ensure it can better tackle problems such as climate change, pandemics and conflicts.

“We have to continuously work on what we call the development roadmap – a better bank, but also a bigger bank,” said Bjerde.

The World Bank’s “evolution road map” calls on its management to develop specific proposals to change its mission, operating model and financial capacity.

It also prescribes exploring options such as a potential new capital increase to unlock more loans and new financing tools.

The capital increase was an ongoing conversation that required engagement with shareholders, Bjerde said.

“There are a lot of good efforts by World Bank management to look at all opportunities to maximize capital and free up resources internally first, through balance sheet optimization and so on.”

US Treasury Secretary Janet Yellen said in April that the next steps for the World Bank to take include potential changes to allow the bank’s private sector and poor country lending arms to lend to sub-sovereign entities such as cities and regional governments.

Subnational lending, Bjerde said, was something the World Bank “would very much like to explore further”.

“It has to be part of the toolkit and the solutions because we have to work with both national governments and sub-national governments to be able to tackle and address some of these pressing needs and pressing priorities,” Bjerde said.

Reporting by Karen Lema; Editing by Jacqueline Wong

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