Yellen rejects World Bank capital increase; no challengers to US nominee

"We do want to see better mobilization of private resources alongside World Bank investments as well, but we're not requesting a capital increase at this time," she added

US Treasury Secretary Janet Yellen

US Treasury Secretary Janet Yellen

Listen to This Article

By David Lawder, Kanishka Singh and Andrea Shalal

WASHINGTON (Reuters) - U.S. Treasury Secretary Janet Yellen on Wednesday rejected the idea of a near-term capital increase for the World Bank and said she expected U.S. nominee Ajay Banga to win election as the bank's next leader, with no challengers emerging as the nomination period closed.

Yellen told U.S. lawmakers that she wants World Bank reforms to vastly expand lending to fight climate change and other global crises, largely by stretching the bank's existing resources, adopting innovative financing policies and mobilizing private finance.

A capital increase was among proposals the World Bank made in January. It would not be possible without the support of the United States, the World Bank's dominant shareholder.

"We are not requesting a capital increase," Yellen said during a budget hearing of the U.S. House of Representatives Appropriations Subcommittee on State, Foreign Operations, and Related Programs. "We do want to see better mobilization of private resources alongside World Bank investments as well, but we're not requesting a capital increase at this time."

The proposed capital increase was made when the World Bank unveiled an evolution road map to meet the challenge that Yellen laid out last year to expand its mission beyond country-specific development projects loans to tackle global crises. But a capital increase would require billions of dollars in U.S. contributions to maintain its shareholding in the bank, clashing with demands from House Republicans for spending cuts in exchange for raising the U.S. federal debt ceiling.

Also Read

Who is Ajay Banga, nominated by Joe Biden to be next World Bank president?

Ajay Banga tests positive for Covid-19 during routine testing in Delhi

US nominee for World Bank president gets positive reviews at G20 meeting

US pick for World Bank, Ajay Banga to meet PM Modi, Sitharaman in India

World Bank nominee Ajay Banga is a 'big believer' in climate science

Indian delegation explores investment opportunities in S Africa, Botswana

World 'turning the tide' toward democracy, says US President Biden

Tech sector H-1B workers' spouses can continue to work in US, says judge

Biden's World Bank pick, Banga poised to win job as sole expected nominee

G20 working group talks ways to make trade work for growth, prosperity

The World Bank's last capital increase, of $13 billion, was approved by member countries in 2018, but the lending capacity created has been strained by the COVID-19 pandemic and spillovers from Russia's war in Ukraine.


The World Bank evolution plan thus far has been drafted under its departing president, David Malpass, who was nominated by former President Donald Trump and announced his resignation in February after his initial failure to say he backed the scientific consensus on climate change.

Malpass told Reuters in February that loan ratio reforms could unlock an additional $4 billion annual lending capacity -- or $40 billion over a decade -- a figure far below the hundreds of billions of dollars that a G20 report said was possible.

Yellen has previously called for the World Bank to take "bolder and more imaginative" steps to unlock more lending for climate change.

That plan is soon expected to pass to Banga, the former MasterCard CEO nominated by President Joe Biden.

The World Bank on Wednesday closed a month-long window for nominations for its next president, with no alternatives to Banga announced. The bank's board is expected to announce next steps in its selection process on Thursday, with a view to confirming a new leader by early May.

Yellen told lawmakers that she expects Banga to be elected World Bank president with a charge to evolve the institution to better address "21st century challenges," including climate, pandemics, conflict and fragility.

Banga, 63, who was born and educated in India but is now a U.S. citizen, has already won the support of enough other governments to virtually assure his confirmation, including from Bangladesh, Britain, Colombia, Egypt, France, Germany, India, Italy, Ivory Coast, Japan, Kenya, Saudi Arabia and South Korea.

Yellen on Wednesday also said U.S. policy toward multilateral development banks' energy finance is flexible and that some low-income countries may qualify for financing for natural gas projects if renewable energy is not feasible.


(Reporting by David Lawder in Washington; Writing by Kanishka Singh and Andrea Shalal; Editing by Gerry Doyle, Matthew Lewis and Leslie Adler)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mar 30 2023 | 7:36 AM IST

Explore News