Trump administration rejects World Bank capital increase

Washington, Oct 14 (AFP) The Trump administration todayrejected a capital increase by the World Bank, which the Banksays is necessary to expand its...
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Washington, Oct 14 (AFP) The Trump administration todayrejected a capital increase by the World Bank, which the Banksays is necessary to expand its global anti-poverty mission.

Treasury Secretary Steven Mnuchin said the hugeWashington-based institution is inefficient and can be moreeffective in the nearly USD 60 billion in development financeit currently allocates each year.

Through greater efficiency, the bank can internally buildits capital base and expand lending without the need for morecontributions from its 189 shareholder nations -- of which theUnited States is the largest.

He also said, in a statement to the DevelopmentCommittee, which sets the action program for the bank and theInternational Monetary Fund, that the Bank needs to cutfunding for emerging economies that don't need significantoutside assistance.

And he said that the bank needs more budget discipline,including controls on staff pay and benefits.

"More capital is not the solution when existing capitalis not allocated effectively. Demand for cheap capital willinvariably exceed its supply -- the key is to ensure thatthese resources are deployed where they are needed most andcan achieve effective and sustainable results," Mnuchin said.

Without naming any specific country, he suggested thatthose relatively strong and developed beneficiaries of theBank's programs like China, which has over USD 3 trillion inforeign reserves, no longer need its support.

"We want to see a significant shift in allocation offunding to support countries most in need of developmentfinance, including through a credible application of the WorldBank's graduation policy," he said.

For wealthier borrowers, the Bank would be better sharingits expert knowledge rather than deploying development loans,he said.

"While we appreciate the Bank's effort to curtailspending through its expenditure review, we see scope forfurther budget discipline, especially with respect tocompensation and the Executive Board budget," he added.

The statement rebuffed World Bank President Jim YongKim's plans to increase the Bank's capital resources, and cameas the administration of President Donald Trump pulls backfrom global agreements in a number of areas.

This week Trump announced the US pullout from Unesco,the United Nations educational and cultural agency. He hashalted two major trade pacts and has forced the renegotiationof a third. (AFP)CHT.

This is unedited, unformatted feed from the Press Trust of India wire.

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