World Bank sets spring 2018 target to enhance financial capacity

FAN Editor
Atrium is seen at World Bank headquarters in Washington
An atrium is seen at the World Bank headquarters building during the IMF/World Bank annual meetings in Washington, U.S., October 14, 2017. REUTERS/Yuri Gripas

October 14, 2017

WASHINGTON (Reuters) – The World Bank Group is aiming to develop new measures to enhance its financial capacity and have its board decide on them at its next spring meetings in April 2018, a spokesman for the institution said on Saturday.

The World Bank has been seeking a general capital increase for its IBRD lending arm for two years, but the Trump administration has been reluctant to support it.

A U.S. Treasury official told Reuters earlier this week that it was too soon to consider such an increase and the World Bank needed to review its balance sheet and shift resources away from higher-income emerging markets such as China toward countries with greater needs.

The bank had originally set a goal of its shareholders deciding on a capital increase at this week’s World Bank and International Monetary Fund annual meetings. In a communique issued on Saturday, the World Bank and IMF joint development committee directed the institution to look at any and all options.

“We ask the Board and Management to review all possible options to enhance the World Bank Group’s financial capacity and develop a package of measures, including internal levers and general and selective capital increases, for Governors’ consideration, with the aim of reaching a decision at the 2018 Spring Meetings,” the committee said.

A World Bank official said these options could include a selective capital increase with only certain countries contributing, a general capital increase from all shareholders or internal measures to stretch resources such as raising interest rates for higher-income borrowers, adjusting equity-to- loan ratios higher, or other steps that would not need the approval of shareholders.

(Reporting by David Lawder; Editing by Andrea Ricci)

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