The first stages of a World Bank revamp are set to begin by April, amid a push for lenders to evolve and meet global challenges like climate change, US Treasury Secretary Janet Yellen said Thursday.
While development lenders need to further their main mission of poverty reduction and inclusive growth, it is also key that they tackle global problems, she said in a speech at the Center for Strategic and International Studies in Washington.
“(Their) core model involves countries borrowing to make specific investments aimed at addressing development constraints in their own countries,” Yellen said.
“That model is insufficient to meet the moment,” she added.
This is because it tends to underinvest in battling global challenges that go beyond a country’s borders.
“We have begun the evolution of the World Bank. Next, we expect to take this agenda to the regional development banks,” she said.
“It’s time for these banks to address global challenges head on — with the urgency and scale that is required,” she added.
Last October, before the annual meetings of the International Monetary Fund and World Bank, Yellen said she and other leaders would call on the bank’s management to develop an evolution roadmap by December.
The United States is the World Bank’s largest shareholder.
US Treasury Secretary Janet Yellen says development lenders’ models are ‘insufficient’ in meeting global challenges – Copyright AFP Yuichi YAMAZAKI
Outlining ongoing work at the World Bank, Yellen said it must create incentives for countries to fight global challenges such as by lowering investment costs for certain projects to be more viable.
For example, the bank could identify “concessional resources” that go towards incentivizing the decommissioning of coal plants and protecting displaced workers during a clean energy transition.
The bank could also make it easier for cities to gain access to funding for climate-smart infrastructure, she said.
“The first phase of implementation should begin by the World Bank and IMF spring meetings in April,” according to Yellen.
Shareholders are working on updates to the bank’s vision and mission, and there are discussions on ways to boost financial headroom.
“We are asking for additional reforms to be decided and implementation to begin by the… annual meetings in October,” she added.
An initial paper from bank management dated December said calls for a roadmap to respond to poverty reduction, shared prosperity and global challenges are “welcome.” It added that progress to tackle these issues will take a “concerted global effort.”
