Reforming the World Bank's approach to risk could unlock nearly $190 billion in additional urgently needed lending for developing countries without jeopardizing its AAA credit rating, a study commissioned by the Rockefeller Institute found. The study, carried out by international finance analytics firm Risk Control, found the bank's two main lending arms, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), have 'significant headroom' to boost lending. Rockefeller hired Risk Control to review and quantify key recommendations made in 2022 by an independent Group of 20 panel, which said easing the bank's strict capital adequacy framework could free up hundreds of billions in additional lending to combat climate change and advance development.
FILE PHOTO: 2023 Spring Meetings of the World Bank Group and the International Monetary FundWASHINGTON - Reforming the World Bank's approach to risk could unlock nearly $190 billion in additional urgently needed lending for developing countries without jeopardizing its AAA credit rating, a study commissioned by the Rockefeller Institute found.
The report, to be published early Wednesday, comes as the United States, China and other top World Bank shareholders prepare to meet in Marrakech, Morocco to review and advance initial reforms already underway at the bank. It said the two lending arms could boost lending to nearly $900 billion if the rating agencies changed their processes to reflect the "unique status of the development institutions" and modified the allowance they make for "callable capital," commitments by shareholders to supply additional resources in the event of severe financial problems.
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