WASHINGTON Oct 1 World Bank President Jim Yong
Kim pledged to increase funding for poor people living in states
in or close to conflict as part of a new lending strategy for
the global development bank and warned of the impact of U.S.
fiscal uncertainty on developing nations.
In a speech in Washington, where a partial government
shutdown began on Tuesday after a standoff between President
Barack Obama and congressional Republicans over healthcare
reforms, Kim said the implications could be far-reaching.
U.S. fiscal uncertainty "combined with other sources of
volatility in the global economy, could do great damage to
emerging markets and developing countries in Africa, Asia, and
Latin America that have lifted millions of people out of poverty
in recent years," he said.
RBC Global Asset Management estimates that each week of
shutdown will shave about 0.1 percentage point off U.S. economic
growth, potentially helping to trim demand for imports.
Kim has sought to energize the bank around a
poverty-eradication goal since he assumed his post last year and
he has launched a major reorganization to make the institution
more nimble and useful, especially to middle-income countries,
and work more closely with the private sector.
Inequality and limited opportunities for the poorest people
in each country can drive instability and breed conflict, Kim
said, pointing to developments in the Middle East, where a wave
of protests drove decades-old rulers from power.
"This is what happens when prosperity is reserved for a
select few," he said in a speech on Tuesday. "All of those left
out feel deeply the burn of inequity."
To meet its goals amid greater competition for development
funds and a tight budget, the World Bank must focus on "bold"
projects and technical solutions to countries, he said.
That will involve working with the bank's private sector
arm, the International Finance Corporation (IFC), to encourage
businesses to create jobs in poorer countries.
It will also require focusing on so-called fragile states,
which will house most of the world's poor people in the next
five years. Kim said the bank's fund for the poorest will plan
to increase its funding to fragile states by 50 percent over the
next three years, as would the IFC.
According to a draft strategy paper presented to the bank's
board last month, and seen by Reuters, the new focus will
require cutbacks in other programs.
Kim made no mention of cuts in his speech ahead of the
International Monetary Fund-World Bank annual meetings next
week. The bank is also still figuring out its financing
strategy, and may start relying more on fees from advisory
services and on earmarked funds from specific governments. The
bank's board will discuss the finances after the meetings.
In April, Kim committed the bank to twin goals of
eliminating extreme poverty by 2030 and boosting the incomes of
the poorest 40 percent of the population in each country.
He has also challenged people to build a social movement
around the issue, using social media and signing petitions.
Kim reiterated the bank's commitment to addressing climate
change, saying it is impossible to tackle poverty without
dealing with the effects of a warmer world.
The World Bank wants to fund 10,000 megawatts of energy in
three years -- the entire capacity of Peru, and also help 12
countries reform their energy subsidies, he said.