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World Bank chief optimistic over major capital increase

Latest update : 12/10/2017

© AFP | World Bank President Jim Yong Kim speaks during a press conference during the World Bank Group/International Monetary Fund Annual Meetings at IMF Headquarters in Washington, DC, October 12, 2017

WASHINGTON (AFP) - 

World Bank President Jim Yong Kim said Thursday that he was optimistic that the leading development financier will be able to increase its capital base to expand lending.

Opening the annual meetings of the Bank together with the International Monetary Fund, Kim acknowledged some resistance to expanding the bank's financial foundations from countries including reportedly the United States, the World Bank's largest shareholder.

US President Donald Trump has been a critic of the Bank and other multilateral institutions as he presses forward on his "America First" agenda.

But Kim said many shareholders are pressing the Bank to expand its activities worldwide, which range from grants to the poorest countries to development loans for projects in others, and financing for businesses in capital-short markets.

World Bank lending fell to $58.8 billion in fiscal 2017, which ended on June 30, from $61.3 billion the previous year.

"We have been arguing that we need a capital increase just because of the demand," Kim said.

The issue will be discussed by the Bank's steering committee on Saturday and Kim said he expected a final decision will be made within six months.

"The US is now a part of the discussions," he said.

"I remain extremely optimistic. I think that once shareholders see how much they are asking us to do and then look at the capital we have to actually get that done, I think eventually will get to a capital increase."

Kim parried questions of why the Bank continues to lend to China, which has more than $3 trillion in reserves and has surpassed some of the World Bank's normal criteria for a country needing its support.

"The lessons we are learning by working in China are very helpful to other middle income countries," he said.

However, he acknowledged, "There is an ongoing discussion about who should qualify for loans and who should not qualify for loans. That is actually a shareholder discussion."

© 2017 AFP