World Bank ‘ready for future challenges’ despite fall in lending

3 Jul 12
The World Bank is ‘well positioned’ to meet future demands although it lent 8% less in 2011/12 than the previous year, according to former president Robert Zoellick.

By Nick Mann | 2 July 2012

The World Bank is ‘well positioned’ to meet future demands although it lent 8% less in 2011/12 than the previous year, according to former president Robert Zoellick.

Data published on Friday showed the Bank committed $52.6bn in loans, grants, equity investments and guarantees in the fiscal year ending June 30, compared with $57.4bn the previous year.

The largest share of the Bank’s funding was committed through its International Bank for Reconstruction and Development, which provided $20.6bn in financing – the majority of which went to Europe and Central Asia ($6.2bn) and Latin America and the Caribbean ($6.2bn). This was less than the €26.7bn offered by the IBRD in 2010/11 and the $44.2bn it lent at the peak of the crisis in 2008/09. It was, however, higher than the historical average of $13.5bn between 2005 and 2008.

Interest-free loans and grants given to the world’s poorest countries through the Bank’s International Development Association fell from $16.3bn in 2010/11 to $14.7bn. Africa received around 50% of total IDA lending in 2011/12, followed by South Asia with 36% of the total.

Last month, the Bank lowered its 2012 growth forecast for developing countries down from a January estimate of 5.4% to 5.3%. It also warned that many of these countries were less well-placed than in 2008/09 to address a global economic slowdown.

Their ability to respond might be constrained if international finance dried up and global economic conditions deteriorated sharply, it added.

In light of this, Zoellick said: ‘The Bank is well positioned for future challenges. Since I joined the institution, the Bank Group has committed over $300bn – most of it to countries overcome food and economic crises.

‘But just as important as the finance is our ability to work with countries – both the public and private sectors – as clients and to customise our services to address their problems.’

Jim Yong Kim took over from Zoellick yesterday. He was selected as the twelfth president of the Bank in April and is set to serve for five years.

Kim said his immediate priority would be ‘to intensify the Bank’s efforts to developing countries maintain progress against poverty in these volatile times’.

He added: ‘I will work with our clients and partners to ensure that we are creating a new economic firewall: one that protects people in developing countries against shocks.

‘The World Bank is uniquely positioned to assist countries build longer-term development strategies through its lending, knowledge and expertise. The World Bank will continue to partner with countries to make smart investments in people, infrastructure and institutions in a fiscally sound and sustainable way.’

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