WASHINGTON (Reuters) – The United States is set to support a $13 billion capital increase for the World Bank in a package that would result in significant lending reforms and boost China’s shareholding, the Financial Times reported on Friday.
Quoting an unnamed senior Treasury official, the newspaper said Treasury Secretary Steven Mnuchin would make the announcement at next week’s International Monetary Fund and World Bank spring meetings in Washington.
“The World Bank will be moving to a sustainable lending model that is not reliant on future capital injections,” the newspaper quoted the official as saying. “We’re looking for more efficiency at these institutions.”
According to the Financial Times, the increase in paid-in capital would be divided in two, with $7.5 billion going to the International Bank for Reconstruction and Development (IBRD), the World Bank’s main arm, and $5.5 billion to the International Finance Corporation (IFC), its private sector lender.
It said the Trump administration, which last year expressed reservations about World Bank lending to China and other middle-income countries, was set to provide $1.3 billion to the IBRD capitalization. However, it had not yet decided whether it would inject new capital into the IFC.
The IBRD’s last capital increase was in 2010 when shareholders agreed to inject $5.1 billion in new capital. At the end of the last fiscal year it reported having $41.7 billion in equity made up of paid-in capital and retained earnings and reserves, the newspaper said.
It said that as part of the deal China’s shareholding in the IBRD would rise from 4.45 percent to around 5.7 percent. The deal is expected to be endorsed in principle by World Bank shareholders at the spring meetings, the newspaper said. Final approval is expected before this year’s autumn meetings.
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Source: Investing.com