WB to enhance lending capacity to tackle climate challenge

NEW DELHI: The World Bank is planning to enhance its lending capacity to address climate change and other global issues. Ahead of its April meeting, the bank will discuss the plan that includes a capital increase and new lending tools, according to an “evolution roadmap” viewed by Reuters on Monday, January 2.

The document containing the proposals has been sent to the shareholders, with which began the negotiation process aimed at changing the mission and financial resources to shift away from the project and country-oriented model that the bank has been using since World War II.

The management team of the World Bank wants to have specific proposals to change its mission, operating model and financial capacity for approval from the joint World Bank and International Monetary Fund Development Committee in October.

A spokesman said that the document aims to provide details on the scope, approach and timetable for the evolution along with regular updates from the shareholders and later the decision as well.

The World Bank is looking for options like new capital increase, changing capital structure of the bank to enhance the lending capacity and new financing tools, including guarantees for the private sector loans as well as other ways to bring in more capital from the private sector.

However, the World Bank Group is not ready to accept the demands raised by some non-profit organisations asking the bank to move away from its longstanding top-tier credit rating system, which goes by the name of AAA Rating, to improve lending.

Janet Yellen, Secretary of the US Treasury, said that the World Bank and other such institutions need to revamp their existing business models to harness private capital fund investment for the benefit of the entire world.