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The World Bank Is Remaking Itself As A Creature Of Wall Street (The New York Times)
January 25, 2018
From the article:
...The World Bank, once a powerhouse of global finance, is searching for relevance. Mr. Kim’s unusual solution: embrace Wall Street.
For decades, the World Bank followed a simple formula. Developed-world governments that are the bank’s members provided the bulk of its money, which was used to make loans to developing nations for infrastructure projects and the like.
But that model is under strain. Some 1.3 billion people still live in extreme poverty, and the bank’s war chest is dwarfed by the funds pouring into developing countries through financial markets. Perhaps most important, the World Bank’s biggest benefactor and largest shareholder — the United States — has become its most trenchant critic.
Mr. Kim’s mission is to revitalize the World Bank by increasing its firepower and winning over the United States. To do so, he is fundamentally, and controversially, changing how the bank operates.
Instead of relying solely on contributions from reluctant donor governments, he is pushing private investors — sovereign wealth funds, private equity firms and insurance companies — to pony up trillions of dollars for projects in Indonesia, Zambia, India and elsewhere. His pitch: They can reap rich returns by putting their money to work alongside the World Bank.
As well as visiting villages, Mr. Kim tours financial capitals, hobnobbing with chief executives, bankers and fund managers. Interest rate swaps, internal rates of return, first-loss debt instruments: the jargon rolls off his tongue with the fluency of an investment banker.
Trained as an anthropologist and medical doctor, Mr. Kim now says that the world of high finance is “some of the coolest stuff I have ever looked at.”
In December, at an environmental summit in Paris, he used the phrase “deals on the table” seven times in an eight-minute speech. During the address he promoted four World Bank projects that would use private-sector capital.
World Bank traditionalists are squirming.
“It is not enough to be just another private equity fund,” said Scott Morris, a former United States Treasury official who worked with the World Bank, now at the Center for Global Development.