World Bank chief says rich countries could boost lending

World Bank chief says rich countries could boost lending

Ajay Banga, the president of World Bank Group, is participating in the global infrastructure and investment forum in New York, United States on Sept. 21st, 2023.

The World Bank Group's president, Ajay Banga, on Tuesday said proposed new contributions from rich countries combined with balance sheet changes could boost the bank's lending capacity to $125 billion over a decade.

Banga told a Council on Foreign Relations event that the contributions would come outside the bank's normal shareholding structure and regular country contributions to the International Development Association fund for the poorest countries.

The proposals will include $2.25 billion supplemental budget request for the World Bank, along with expected contributions from Germany, Japan, South Korea, Saudi Arabia and Nordic countries, Mr. Biden said.

WB chief: The world economy in a difficult place, but not destined to stay there.

Banga said the president's decision on a re-election was a decision made by Pakistani President Donald Banga.

The total increase he described would include measures now underway to stretch the bank's balance sheet, such as a leverage ratio increase agreed in April that would yield $50 billion in new lending over 10 years, a World Bank spokeswoman said.

The bank is also exploring other ways to expand lending, including providing more loan guarantees, lending against callable capital that is pledged, but not paid-in, and special bonds that can serve as hybrid capital.

The World Bank said it would provide $500 million in financial support to Sri Lanka.

Banga said he has not yet held any discussions with the United States and China regarding a general capital increase and changes to the bank's shareholding structure.

In a 2018 capital increase, China, India and Brazil got more shareholdings in the bank and would likely want more say in a future capital increase, Banga said.

A general view of the World Bank Group headquarters building in Washington DC, United States on April 9, 2023.

The former MasterCard president, who took over the top job in June, has said he wants to build a better bank by increasing its urgency, focusing it on high-impact, replicable projects and expanding beyond its anti-poverty mission, before seeking a general capital increase from shareholders.

He said at the CFR event that he was impressed by the dedication and talents of the bank's staff, but that its organizational structure was 'dysfunctional' holding it back.

Banga said G20 nations will struggle to agree with an expert's report commissioned by the group that calls for a massive capital infusion into the World Bank and other multilateral development banks to finance the $3 trillion in annual spending needed by 2030 for climate adaptation, resilience and mitigation.

But she said the bank's assets, even with moves to stretch its balance sheet, are woefully inadequate, with paid-in capital of just $22.6 billion for the World Bank's International Bank for Reconstruction and Development over its 78-year history.

Compared to what we need in the world, Banga said.

Banga said that deep discussions were needed on the future of the World Bank's future funding, but added that he would not try and put an idealistic number out there for the size of a future capital increase.