Yellen urges new World Bank governor to “get the most out of” balance sheet By Reuters



© Reuters. US Treasury Secretary Janet Yellen welcomes World Bank President-elect Ajay Banga at the Treasury Department in Washington, USA, June 1, 2023.Reuters/Jonathan Ernst


By David Lawder

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen told World Bank Group president-elect Ajay Banga on Thursday to “make the most of our bank balance sheets” and focus on climate finance and global development goals. The Treasury Department announced that it has instructed it to mobilize more private capital for

In a meeting with Banga on the eve of the former Mastercard (NYSE:) CEO’s appointment to the World Bank, Yellen said the Treasury Department would work closely with banks on the evolution of banks to address climate change and other global challenges. expressed a strong desire to continue .

This includes continuing to implement the recommendations of last year’s G20 report on capital adequacy, which it argued would enable hundreds of billions of dollars of new lending through its transformation into a multilateral development bank.

Under Banga’s predecessor David Malpass, Banga Bank shareholders in April launched the first phase of balance sheet changes to increase lending by $50 billion over 10 years while maintaining a top-tier AAA credit rating. Acknowledged. But Yellen insisted that further lending reforms and other changes would be “step-by-step” in the coming months.

Yellen said the continued implementation of these reforms will “make the most of the central bank’s balance sheet” and “align its operating model towards common development goals and to make the central bank more responsive and agile.” The Treasury Department said it could mobilize more private capital to “refine it.” Said.

He also said the World Bank needs to work more closely with its sister development banks.

“Secretary Yellen emphasized the need to support the poorest of our bank members as they continue to face multiple crises, including continued global macroeconomic headwinds exacerbated by Russia’s war with Ukraine,” the Treasury said. I did,” he added.

Banga, 63, was elected as President of the World Bank on May 3 by the World Bank Board of Governors for a five-year term. The Indian-born financial and development expert nominated by US President Joe Biden was the sole candidate for the position.

The United States, the largest shareholder of the World Bank, has traditionally chosen an American to run the World Bank, while Europe has chosen the president of the International Monetary Fund. Banga, who has been a US citizen since 2007, will assume his new role on Friday.

In a farewell post on LinkedIn, Malpass noted that during his tenure, the bank’s climate change lending to developing countries grew, more than doubling last year to a record $32 billion, and that the coronavirus pandemic has pushed the end of the deal. He highlighted the $440 billion the World Bank has mobilized against the emerging overlapping crises. -19, Ukraine war, food and energy price shocks, supply chain disruptions, and unsustainable debt.

Malpass has pushed for greater debt transparency and restructuring, particularly in China’s lending to poor countries. He said the accumulation of huge government debt threatens to sap the vitality of the global economy.

“Without change, the world is likely to face a prolonged period of low growth, with developing countries likely to be hit hardest,” he added.

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