World Bank should keep pumping out aid, review capital adequacy - Development Committee

FILE PHOTO: A participant stands near a logo of World Bank at the International Monetary Fund - World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, October 12, 2018. REUTERS/Johannes P. Christo

WASHINGTON (Reuters) - The World Bank should push ahead with its efforts to deliver $160 billion in coronavirus aid by June 2021 and explore additional emergency financing and debt relief for developing countries, the bank’s steering committee said on Friday.

In a communique, the joint World Bank and International Monetary Fund Development Committee said the “bold and decisive” response should be accompanied by a review of the World Bank Group’s financial capacity beyond the current fiscal year to ensure that it remains “adequately capitalized to fulfill its mandate.”

The statement said that the IMF has provided some $100 billion in assistance to over 80 countries during the pandemic so far. It also urged the IMF “to deploy all available tools and resources to help members achieve a durable exit from the crisis while building more resilient and inclusive economies.”

The statement said that World Bank support for more than 100 countries has totaled $45 billion so far, including $11 billion from its private sector arm, the International Finance Corp and $2 billion from its Multilateral Investment Guarantee Agency.

On Wednesday, U.S. Treasury Secretary Steven Mnuchin warned the World Bank to manage its financial resources “judiciously and transparently.” He said the bank should prioritizing funds for poor countries with the greatest needs, not those with robust access to market financing, “so as not to burden shareholders with premature calls for new financing,” Mnuchin said.

The World Bank shareholders in 2018 approved a $13 billion capital increase that mandated the bank wind down lending to wealthier middle-income countries, such as China, to shift resources to needier countries.

The Development Committee, made up of 25 finance ministers and central bank governors representing World Bank and IMF major shareholding countries, including Mnuchin, said the World Bank and other multilateral development bank should “explore additional proposals for COVID-19 emergency financing” for the poorest countries.

Reporting by David Lawder; Editing by Marguerita Choy and Daniel Wallis