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The Trump administration is expected to support a $13 billion capital increase for the World Bank in a package that would see significant lending reforms and an increase in China's shareholding.
US Treasury secretary Steven Mnuchin is set to tell fellow World Bank shareholders at next week's spring meetings in Washington that he will support an increase in the bank's capital, according to a senior Treasury official. The move would be a significant shift in the US administration's attitudes towards multilateral institutions. The move would be a significant shift in the US administration's attitudes towards multilateral institutions.
Scott Morris, a former Treasury official now at the Center for Global Development, a Washington think-tank, said: “I'm hearing a lot of positive sentiment both from the Bank side and the US side. That's pretty remarkable.”
The Treasury official said the goal was to have the bank be self-sustaining. “The World Bank will be moving to a sustainable lending model that is not reliant on future capital injections,” the official said.
The increase in paid-in capital will be split into two with $7.5 billion going to the International Bank for Reconstruction and Development, the bank's main arm, and $5.5 billion to the International Finance Corporation, its private sector lender, the official confirmed. The US is expected to provide $1.3 billion to the IBRD capital increase, the official added, but has not yet decided whether it will inject new capital into the IFC.
The IBRD last saw a capital increase 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.
