As a representative of the constituency of Bangladesh, Bhutan, India and Sri Lanka at the 94th meeting of the Development Committee (DC) in Washington on Sunday, India’s Finance Minister Arun Jaitley emphasised heavily on re-capitalising the World Bank when it is heavily capital constrained. Jaitley added, “Unfavourable global scenario has made the achievement of twin goals of the World Bank Group and the ambitious SDGs even more challenging. Achievement of these goals requires trillions of dollars of development financing. This makes the role of the World Bank group even more critical both as a provider of finance and knowledge.”
The 94th Meeting of the DC, the ministerial-level forum of the World Bank Group and IMF for inter-governmental consensus building on development issues, focused on the ‘Forward Look’ exercise carried out by the World Bank and discussion on the Dynamic Formula of Shareholding of member countries in the International Bank for Reconstruction and Development (IBRD), a member institution of the Bank.
“In view of the Bank being capital constrained today, there is a need to expand the role of not only IDA, but also IBRD and International Finance Corporation (IFC) to enlarge the lending programme of the Bank Group,” he said. For instance, in the case of India, during the last fiscal year, fresh commitments delivered were only $3.8 billion as against the requirement of $5-7 billion. During the last spring meeting, Jaitley had called for a $100 billion bank.
The ‘Forward Look Paper’ has proposed annual lending of $40 billion per annum by IBRD. It also proposes doubling of IFC’s annual investment capacity. As IFC needs to play increasing role in ramping up private sector’s capacities in Developing countries, it is a much-needed step.
“Increased financing measures need to be coupled with renewed efforts to find innovative solutions, active pursuance of knowledge sharing, coordinated responses with the private sector, other development partners and international organisations,” Jaitley said. He believes, the countries of the constituency have displayed resilience in this challenging environment where the countries are likely to grow more than last year.
Jaitley also made the point that the final outcome of the World Bank shareholding “must not lose sight of the raison d’etre of the realignment – to increase the voice and voting power of developing countries, which we had clearly stated in 2010 and reiterated in 2015 DC Communiques.”
Jaitley said the International Development Association (IDA), part of the World Bank, is the single-most important concessional platform to meet the needs of low-income countries.
He shared the assessment that the Bank should not only be bigger but be more agile, efficient and less expensive to do business with. The Bank’s active promotion of South-South cooperation, increased use of Country Systems and a pragmatic implementation of environmental and social standards would help considerably in making it a better Bank, he added.
According to Jaitley, the World Bank stands at a crossroads as it has not only to reinvent itself as it embraces the challenges but design and execute its projects efficiently, nimbly and innovatively like never before.