(MENAFN) The World Bank is undergoing a reform that could lead to a USD50 billion lending boost over the next decade, according to US Treasury Secretary Janet Yellen. This announcement comes ahead of the stakeholders' meetings next week, where significant changes are expected to be announced. The meetings will be attended by central bankers, finance ministers, and participants from more than 180 member countries, gathering in the US capital for the International Monetary Fund and World Bank's spring meetings.
One of the key topics of discussion during the meetings will be the World Bank's evolution, as there is a push for lenders to revamp and meet global challenges such as climate change. As the largest shareholder of the World Bank Group, the US has high expectations for the bank's reform. Yellen stated in an interview with AFP on Thursday that she expects an update of the bank's mission to include building resilience against climate change, pandemics, conflict, and fragility as core goals. She added that these challenges are not separate or conflicting but rather, inextricably linked.
Yellen also mentioned that there would be an announcement of the bank stretching its financial capacity to meet these objectives, which could result in an additional USD50 billion in extra lending capacity over the next decade. This boost will mark a 20 percent rise in the International Bank for Reconstruction and Development's sustainable lending level, which is the World Bank's middle-income lending arm. The US Treasury Secretary also expects an announcement on updating the bank's operational model to orient it towards the goals they are setting, which includes creating more incentives for mobilizing domestic and private capital.
The World Bank submitted an evolution plan in March to be discussed with its development committee on April 12 during the spring meetings. Yellen noted that World Bank President David Malpass has laid a "solid foundation" for the ongoing work and expects US candidate Ajay Banga to be elected to the helm of the organization and continue the revamp. Banga was the sole nominee for the position after Malpass announced this year that he would step down early.
Aside from the World Bank reform, policymakers will also discuss support for war-torn Ukraine and debt restructuring during the upcoming meetings. Yellen stated that they have seen some movement by China on participating in debt restructuring for Sri Lanka, which is a hopeful sign. As global growth slows, the World Bank warns that the outlook is especially tough for the poorest economies, which face sluggish growth driven by heavy debt burdens and weak investment.
Discussions on debt restructuring will continue next week as a newly formed global sovereign debt roundtable gathers. Yellen mentioned that they are having useful technical discussions on important elements of debt restructuring and that China has been participating. Washington will continue pushing for a speedier and more predictable operation of the G20 "common framework" for debt restructuring as well. Regarding Ukraine, Yellen stated that they will work with all their allies to insist that Russia ceases its brutality in Ukraine, and the United States would press for economic support alongside its partners on this front.
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