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World Bank Chief Kim Signals Big Changes to Come

Friday, 05 Oct 2012 07:29 AM

 

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The head of the World Bank said he is preparing broad reforms at the development lender to make it more effective in ending global poverty and will discuss the changes with member countries at meetings in Tokyo next week.

The annual meetings of the International Monetary Fund and World Bank from Oct. 11-14 in Japan will be the first opportunity for Jim Yong Kim to put his mark on the institution since becoming president in July.

"We're not ready to ask for specific changes yet ... but if we are going to be really serious about ending poverty earlier than currently projected ... there are going to have to be some changes in the way we run the institution," Kim told reporters.

He said he wants the poverty-fighting institution to be less focused on pushing development loans out of the door and more on making a difference on the ground.

"Specifically, I am going to ask the governors to work with us so the organization can move to a model where we move more quickly, we can make mid-course corrections more easily and where our board and our governors focus much more on holding us accountable for results on the ground in countries, rather than focusing so much on approval of large loans," he added.

Kim said he would be more specific about reforms at the next meetings of member countries in April.

"The need for these changes has been clear for a very long time," he added.

With the United States and European countries wrestling with weak growth and high debt burdens, Kim said now was not the time to ask big donors to pony up money for the World Bank.

"At this point, I see really no appetite ... it is not the time for us to have a discussion about a capital increase, this is something I don't think the donor countries are ready for," he added.

Kim, a Harvard-trained medical doctor and anthropologist, said the Tokyo meetings would also highlight growing concerns about rising food prices and the impact climate change is having on farmers around the globe.

The worst drought in half a century in the United States and poor crops from the Black Sea bread basket have lifted world prices of staples such as corn, wheat and soybeans. While prices have not reached 2008 record levels, increased food price volatility is a worry.

As the first scientist to head the World Bank, Kim said the increases have raised his concern over the impact on poor countries from climate change.

"This is the first drought that scientists clearly attributed to man-made climate change," Kim said. "Climate change is real, the scientific community is overwhelming in agreement about the dimensions about man-made climate change and we simply must face it."

Until now, the World Bank has been reluctant to speak out loudly on global climate change for fear of getting involved in the politics of combat ting global warming.

Developing countries have blamed the European Union, the United States and other rich economies for trying to avoid deeper emissions cuts and dodging increases in finance to help poorer nations deal with climate change.

SLOWING GLOBAL GROWTH

Kim said the eurozone debt crisis and its impact around the world would also loom large in the Tokyo meetings.

Developing nations, which have so far weathered the global crisis well, are now seeing clear signs of slowing economic activity as a two-year debt crisis in the eurozone continues to stifle demand and financial markets are roiled by uncertainty over bailout prospects for Greece and Spain.

Despite the slowdown, economies in Africa, Asia and Latin America are still likely to grow at rates above 5 percent thanks to more than a decade of solid policies and a growing interest by investors to tap into so-called frontier markets.

"All of us are rooting for the Europeans to quickly find a path toward solidarity in a way to resolve their problems," Kim said, adding that the World Bank stood ready to offer its expertise to any country, include those in the eurozone.

The bank has had decades of experience working with governments in developing countries to help improve the functioning of their economies through structural changes. Some analysts believe that expertise could help countries like Greece and Portugal.

As Kim hones in on ways to make the World Bank more flexible, he said it should focus on helping governments create an environment where businesses can flourish and create jobs — one of the most pressing issues facing many countries.

"One of the things we are trying to do is define more clearly what is the bottom line for the World Bank, what is it that we really do, and how we are going to organize ourselves so that every day we are working toward that bottom line," he said.

"It seems clear that what we're best at and what people have the greatest passion for is to work to end poverty. The way we do that is by boosting prosperity," Kim added.

© 2014 Thomson/Reuters. All rights reserved.

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