World Bank Shareholders Target Expanded Lending

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US officials are pushing for changes at the World Bank and related financial institutions that could increase lending for climate change mitigation and adaptation at meetings taking place in Washington this week.

Leaders from around the world will meet in the US capital to discuss policies at the International Monetary Fund and World Bank, as well as other multilateral development banks (MDBs).

US officials say an initial batch of changes could see some $50 billion in expanded lending over the next decade but characterized that target as a first step.

“There’s certainly much more we want to do,” a US Treasury official told reporters Monday. The US is the World Bank's largest shareholder.

On the table are technical changes to policies that could expand lending available for climate finance and other issues.

One way of doing that is to give more consideration to existing default guarantees from funding nations, a move that would increase the risk appetite at the MDBs.

Climate in Focus

Taken together, changes at the MDBs could free up hundreds of billions of dollars for climate financing, US climate envoy John Kerry said last year.

US Treasury Secretary Janet Yellen will also “encourage” other wealthy countries to follow the US climate-focused Inflation Reduction Act and “make similar investments in fighting climate change and bolstering economic resilience,” the Treasury official said Monday.

But the World Bank and other MDBs are under scrutiny by some environmental groups, which argue that any public funding at all for fossil fuel developments is too much.

While the World Bank has in the past claimed zero financing for fossil fuels, environmental organizations argue that the amounts remain substantial when taking into account all of the group’s associated organizations.

World Bank funding for fossil fuels averaged about $1.3 billion between 2020 and 2022, an analysis released last week by the group Oil Change International found, about two-thirds of which went to natural gas projects.

Overall, MDB funding for fossil fuels averaged $3.3 billion per year between 2020 and 2022, from an average of $9.7 billion per year in 2017-19.

Officials will also meet with Ajay Banga, the US nominee to replace outgoing World Bank head David Malpass.

Malpass, who was appointed under former US President Donald Trump, came under fire for his remarks about climate change and is broadly criticized by environmental groups. He announced in February he would step down early.

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