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World Bank executive says won't persist with capital increase deadline
September 7, 2017 / 7:31 AM / 18 days ago

World Bank executive says won't persist with capital increase deadline

TOKYO (Reuters) - The World Bank should not be “bogged down” on a specific date for member countries to boost its capital, a senior executive of the multilateral lender said, suggesting a deal won’t be struck before the initial deadline of end-2017.

Axel van Trotsenburg, the World Bank’s vice president of development finance, said the priority should be to ensure all member countries are comfortable with the deal.

“It is always a challenge when you have 190 countries around the table. Everyone has an opinion and everyone has a priority,” he said, adding it was inappropriate to set a timeframe like “one week or one month.”

“We like to find consensual solutions, where ultimately everybody is satisfied with the compromise that has been worked out,” he told Reuters on Thursday.

The World Bank has been pushing over the past few years for a general capital increase for its affiliate lender, International Bank for Reconstruction and Development (IBRD).

It set a goal of agreeing on the capital boost in 2017 at an annual meeting in Lima in 2015, and hoped to push through a deal at its upcoming annual meeting in Washington in October.

But an agreement will likely be delayed until the subsequent meeting in April next year as the United States, the biggest shareholder of the World Bank, has refused to shoulder the fiscal burden, three Japanese government sources told Reuters.

The U.S. disapproval may force the World Bank to scrap the capital increase plan altogether, the sources said on condition of anonymity because they are not authorized to speak to media.

When asked about the chance of no agreement in October, Trotsenburg said he would not call it a postponement as there will be “continued work” for a deal.

“If you do it ambitiously fast but you don’t do it right, you don’t have a good result,” he said. “You need to be focused on good results and don’t get bogged down on one date.”

The United States holds a 17.25 percent share in IBRD.

U.S. President Donald Trump’s administration has signaled reluctance toward cooperating with multilateral institutions, fuelling concerns about protectionism around the world.

Trotsenburg, however, downplayed those worries.

“You need to deal very carefully with taxpayers’ money and you need to be highly accountable,” he said, adding it was wrong to conclude Washington was not committed to development aid just because it asks tough questions.

Trotsenburg also said the International Development Association (IDA), a World Bank arm that offers aid to the world’s poorest countries, plans to issue the first batch of bonds to fund its spending during the first half of next year.

That will be part of a broader plan by IDA to diversify its resources beyond contributions from donor countries. IDA seeks to raise funds in the capital market through issuance of bonds during a three-year period until June 2020, and has secured triple-A credit ratings from Moody’s and S&P.

Editing by Shri Navaratnam

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