Yellen to push development bank evolution at spring meetings
U.S. Treasury Secretary Janet Yellen. REUTERS/Jonathan Ernst/File photo
WASHINGTON -U.S. Treasury Secretary Janet Yellen on Wednesday will host a roundtable discussion on further steps to evolve the World Bank and other development lenders to tackle climate change and other global crises beyond a $5 billion annual World Bank lending expansion, the Treasury said.
The discussion on the sidelines of the World Bank and International Monetary Fund Spring Meetings will bring together finance ministers from major shareholders and borrowing countries that will cover “ways to maintain momentum to evolve the multilateral development banks to better meet current challenges,” the Treasury said in a statement.
The World Bank has proposed balance sheet changes that would quickly allow it to lend an additional $50 billion over 10 years while maintaining its top-tier AAA credit rating, a step that bank shareholders are widely expected to adopt this week.
U.S. Treasury Undersecretary Jay Shambaugh said the reforms amounted to a “once in a generation transition” of the institutions, and called the World Bank‘s plans a “downpayment” on the reforms that would be deepened in time and spread to other multilateral development banks.
“This was the low-hanging fruit. These were the things we could accomplish in six months after the charge went to the bank,” he told an event hosted by the Brookings Institution on Monday. “We definitely don’t view that as a stopping point.”
Shambaugh said it was important to fix the banks’ operational structure and incentives and ensure effective use of funds, noting that some of the development banks had “considerable room” on their balance sheets.
A senior Treasury official said Yellen would discuss changes aimed at harnessing more private capital and creating public-private partnerships to tackle climate change and other global problems such as pandemic preparedness and economic fragility.
The official said Yellen was hoping to lay out another roadmap to make more progress on the banks’ operational models and financial capacity.
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