World Bank seeks funds to address climate change and other crises

The World Bank (WB) intends to significantly expand its lending capacity to address climate change and other global crises. This is reported Reuters with reference to the development roadmap developed by the bank. According to it, the WB is considering an increase in capital and new lending instruments.

The document has already been sent to shareholders. The bank’s management intends to prepare specific proposals to change its mission, operating model and financial capabilities for approval by the joint development committee of the bank and the International Monetary Fund in October. According to the roadmap, the WB will study the increase in capital and changes in its structure so that it can increase the issuance of loans, and increase lending limits. New financing instruments are also being considered, in particular guarantees for loans to the private sector.

At the same time, the document warns that the increase in loans to address the problems of climate change, health care, food security and others may require an increase in the capital of the International Bank for Reconstruction and Development (IBRD). In 2018, its capital was increased by $13 billion. However, these funds, as noted in the road map, were “intended to prepare for one crisis in a decade, not many,” so the IBRD’s reserves are likely to be exhausted by mid-2023 of the year.

Another option under consideration implies that the WB shareholder countries will increase their contributions to the fund for the world’s poorest countries – the International Development Association (IDA). It is specified that in recent years these contributions have decreased, although the need for them continues to grow. In addition, the possibility of creating a new concessional lending trust fund for middle-income countries is proposed. It will be similar in structure to IDA and will be able to receive funds, including from private foundations.

“The challenges facing the world require a significant increase in support from the international community,” the road map says. A WB representative told the agency that the document aims to provide detailed information on the scope of the problems and approaches to their resolution. Specific decisions on the road map should be made later this year.

According to WB estimates, in 2022 the economies of Europe and Central Asia shrank by 0.2% following the fall in the GDP of Russia, Ukraine, Belarus and Moldova. The decline in the Russian economy was expected at 4.5%, however, according to the bank, in 2023, against the backdrop of restrictions on the supply of energy resources and sanctions, the decline could be 3.6%. Global inflation, meanwhile, reached 9.3% in annual terms by July, the highest level since 2008, in the region the rate accelerated to 14.5% (including core inflation to 15.6%).

Details – in the material “Kommersant” “Don’t rush to land”.

Laura Keffer