# Exclusive-World Bank seeks more funds to address climate change, other crises -document Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-01-03 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: World Bank plans major lending capacity expansion for Meta Description: The World Bank aims to negotiate with shareholders for a capital increase and new lending tools to address global crises and climate change, according to a URL: https://financedigest.com/exclusive-world-bank-seeks-more-funds-to-address-climate-change-other-crises-documenthtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-01-03t021404z4lynxmpej0200vrtroptp4climate-worldbank-1736814647816-compressed.jpg) By David Lawder WASHINGTON (Reuters) – The World Bank is seeking to vastly expand its lending capacity to address climate change and other global crises and will negotiate with shareholders ahead of April meetings on proposals that include a capital increase and new lending tools, according to an “evolution roadmap” seen by Reuters on Monday. The roadmap document – sent to shareholder governments – marks the start of a negotiation process to alter the bank’s mission and financial resources and shift it away from a country- and project-specific lending model used since its creation at the end of World War Two. The World Bank management aims to have specific proposals to change its mission, operating model and financial capacity [ready for approval by the joint World Bank](https://www.financedigest.com/are-banks-ready-for-the-new-accountability-regime-in-2016.html "ARE BANKS READY FOR THE NEW ACCOUNTABILITY REGIME IN 2016?") and International Monetary Fund Development Committee in October, according to the document. A World Bank spokesman said that the document aimed to provide details on the scope, approach, and timetable for the evolution, with regular updates for [shareholders and decisions later in the year](https://www.financedigest.com/ericssons-board-rebuked-by-shareholders-at-agm-for-second-year-in-a-row.html "Ericsson’s board rebuked by shareholders at AGM for second year in a row"). AAA [RATING TO STAY](https://www.financedigest.com/stocks-dip-yields-climb-as-rate-hikes-seem-to-stay-the-course.html "Stocks dip, yields climb as rate hikes seem to stay the course") The development lender will explore options like a potential new capital increase, [changes to its capital structure to unlock more lending and new financing tools such as guarantees for private sector loans and other ways](https://www.financedigest.com/10-ways-automation-has-changed-the-role-of-the-cfo.html "10 ways automation has changed the role of the CFO") to mobilize more private capital, according to the document. But the World [Bank Group](https://www.financedigest.com/crown-agents-bank-owner-explores-sale-of-british-payments-group-sources.html "Crown Agents Bank owner explores sale of British payments group –sources") (WBG) is not ready to bow to demands from some non-profit organizations to abandon its longstanding top-tier credit rating to boost lending, stating: “Management will explore all options that increase the capacity of the WBG whilst maintaining the AAA rating of the WBG entities. U.S. Treasury Secretary Janet Yellen has called for the World Bank and others to revamp their business models to boost lending and harness private capital to [fund investments](https://www.financedigest.com/plastic-antibody-developer-strengthens-board-following-further-investment-from-mercia-fund-management.html "“Plastic antibody” developer strengthens board following further investment from Mercia Fund Management") that more broadly benefit the world, such as helping middle-income countries transition away from coal power. A U.S. Treasury spokesperson declined comment on the [World Bank](https://www.financedigest.com/post-crash-banking-regulation-is-transforming-the-world-of-corporate-lending-for-the-better.html "Post-crash banking regulation is transforming the world of corporate lending – for the better") document. The [bank said proposals under consideration include higher statutory lending limits](https://www.financedigest.com/credit-suisse-54-billion-lifeline-offers-limited-respite-to-global-banks.html "Credit Suisse billion lifeline offers limited respite to global banks"), lower equity-to-loan requirements and the use of callable capital – money pledged but not paid in by member governments – for lending. Development experts say this shift would greatly [increase the amount of lending compared to the current capital](https://www.financedigest.com/frances-ynsect-to-refocus-bug-business-after-capital-increase.html "France’s Ynsect to refocus bug business after capital increase") structure, which only utilizes paid-in capital. The [challenges the world is facing call for a massive step up in the international community’s support,” the bank](https://www.financedigest.com/big-banks-can-be-challengers-too.html "Big banks can be challengers too") said in the document. For the WBG to continue to play a [central role in development and climate](https://www.financedigest.com/inflation-fighting-central-bankers-air-climate-role-doubts.html "Inflation fighting central bankers air climate role doubts") finance, it will need a concerted effort by both shareholders and management to step up WBG financing capacity. INADEQUATE FUNDING The roadmap document cautions that a build-up of lending for climate change, health care, food security and other [needs may require a capital increase to boost the capacity of the World Bank’s](https://www.financedigest.com/bank-of-england-still-needs-to-see-the-job-through-on-inflation-pill.html "Bank of England still needs to ‘see the job through’ on inflation: Pill") middle-income lending arm, the International Bank for Reconstruction and Development (IBRD). IBRD’s $13 billion capital increase in 2018 “was designed to be prepared for one mid-sized crisis a decade, and not multiple, overlapping crises” including the [COVID-19 pandemic](https://www.financedigest.com/pandemic-restrictions-that-hampered-the-circulation-of-viruses-other-than-covid-19.html "Pandemic restrictions that hampered the circulation of viruses other than COVID-19"), the war in Ukraine and the effects of accelerating climate change, the document said. IBRD’s crisis buffers will likely be depleted by mid-2023, it said. Another option, according to the roadmap, is for World Bank [shareholder countries to step up periodic contributions to the lender’s fund](https://www.financedigest.com/intercos-fund-shareholders-l-catterton-otpp-sell-6-stake-at-7-discount.html "Intercos fund shareholders L Catterton, OTPP sell 6% stake at 7% discount") for the world’s poorest countries, the International Development Association (IDA), which have declined in recent years despite increasing needs. The roadmap also offers the option of creating a new concessional lending trust fund for middle-income countries that would focus on global public goods and be similar in structure to IDA, with regular [funding replenishments that would be separate from the bank’s](https://www.financedigest.com/bank-funding-for-renewables-stagnates-vs-oil-and-gas-report.html "Bank funding for renewables stagnates vs oil and gas – report") capital structure. Such a fund may attract donor bilateral resources separate from shareholder [budget lines supporting](https://www.financedigest.com/strategic-budgeting-ensures-success-of-community-support-programs.html "Strategic Budgeting Ensures Success of Community Support Programs") the WBG, and potentially include donors beyond shareholders,” such as private foundations, the bank said. The [bank said that the evolution of its mission to increase](https://www.financedigest.com/banking-and-fintech-convergence-will-increase-reliance-on-it.html "Banking and Fintech Convergence will Increase Reliance on IT") climate lending while maintaining good development outcomes will require additional staff and budget resources, which have declined 3% in real terms over the past 15 years. (Reporting by David Lawder; editing by Grant McCool) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---