US President Barack Obamas administration wants to ensure multilateral development banks (MDBs) have adequate resources, but any capital increase must be tied to reforms, US Treasury Secretary Timothy Geithner said on Monday.
Geithner said an assessment of the capital needs of poverty-fighting development banks will be completed by the first of 2010. While the US appears to favor a capital injection for the World Bank, other large donor countries such as Italy, France and Britain are less keen.
World Bank member countries are divided over whether or not the bank needs a capital increase and how the funding should be raised. Developing countries are pushing for the move because of credit constraints in global markets and have urged an early agreement on the issue.
– Given the size of projected demand associated with the current crisis, the Bank needs a general capital increase and we urge members to come to an early agreement, Indonesia’s Finance Minister Sri Mulyani Indrawait said in a statement to the World Bank’s Development Committee meeting on Monday.
UK Development Secretary Douglas Alexander wants the World Bank to cut red tape and ease loan terms for poor countries in return for extra funds.
Britain will reject World Bank calls for extra cash to fight the global economic downturn unless the Washington-based organization cuts its bureaucracy and soft-pedals on the loan conditions imposed on poor countries.
He added that the Bank should learn from the International Monetary Fund, which had dropped loan conditions on its emergency Exogenous Shock Facility to ensure that poor countries received assistance quickly.
Kilde: www.worldbank.org
