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CGD in the News

October 12, 2017

US Demands World Bank Overhaul of Lending to China (Financial Times)

From the article:

But the US objections to World Bank lending policies suggest Mr Kim’s vision for the bank, which has been premised heavily on engaging China, faces more serious headwinds.

Scott Morris, a former US Treasury official now at the Center for Global Development, a think-tank, said the US position amounted to a challenge to the World Bank’s existing strategy, which has been to use lending to China to engage with Beijing and try to offset the impact of new institutions like the AIIB. 

It also amounted to the Trump administration “picking a direct fight with China” over the mission of a major international institution. 

“It’s really setting up some pretty deep divisions going forward,” he said. 

Read full article here.

October 10, 2017

5 Things To Watch At The 2017 World Bank Annual Meetings (Devex)

From the article:

WASHINGTON — “Capital” looks to be the watchword of the 2017 World Bank and International Monetary Fund annual meetings: Who has it? Who’s going to get more of it? And how can it be better deployed to achieve maximum development impact around the world?

These are the first annual meetings of World Bank President Jim Yong Kim’s second term in office, and they provide a venue for Kim to make the case for why the multilateral development institution still occupies a central place in a changing world — and why it should get more funding. That pitch, difficult at the best of times, has proven a hard sell to a U.S. president and administration wary of investing in multilateral cooperation...

“We are moving in a direction and the vast majority of countries now, we think, are onboard, and it's just a question of when the capital increase will actually happen,” Kim told reporters in a press call last week. “Now it's just a question of timing. And so we hope that there will be a discussion during these annual meetings, and that there will be a deadline as to when the final decision would be made.”

Kim has run into a skeptical U.S. Treasury Department, said Scott Morris, senior fellow at the Center for Global Development and a former deputy assistant secretary at Treasury. Some U.S. officials object to the World Bank’s lending to large economies such as China, Morris said, and they believe that instead of getting more capital, the bank should do less lending to America’s economic competitors. Kim’s task will likely be to strike a bargain that relates to the bank’s large country borrowers in exchange for a shareholder agreement to hand over more money, Morris said.

“They’re not going to get a firm ‘yes’ — or even a soft ‘yes’ — from the United States at this stage. They’re hoping to avoid anything that looks like a firm ‘no,’” Morris said.

He added that Kim’s aim will be to extract some kind of statement from the U.S. representatives to the bank that creates a timeline for deciding about the capital increase in time for the 2018 spring meetings in April.

One prominent World Bank staff member told Devex that the question of the capital increase is the one thing on bank employees’ minds during these annual meetings, because a ‘yes’ or ‘no’ from the bank’s shareholders “will determine whether we're in expansion mode or hunkering down.”

Read full article here.

October 5, 2017

World Bank's Kim Says Most Members 'On Board' With Capital Hike (Reuters)

From the article:

However, Kim has one major obstacle to increasing the bank’s capital base: a reluctant Trump administration, which as the World Bank’s largest shareholder, effectively holds veto power over its decisions.

“Everybody’s willing to do this except for the United States at this point,” said Scott Morris, a senior fellow at the Center for Global Development, a Washington-based think tank. “We have to convince a new administration on the basic case. I think all the evidence is that they’re not there yet.”

Morris, a former U.S. Treasury official who oversaw U.S. membership in the World Bank and IMF Fund during the Obama administration, said the administration likely has some objections to the World Bank’s continued lending to China and some other large emerging market countries.

Read full article here.