The World Bank Group will be judged on how it delivers on the mandate it was given as part of its recent $65bn capital increase to deliver results “on the ground”, particularly in low income countries, its incoming managing director has said.
Axel van Trotsenburg told GlobalMarkets that the bank’s president David Malpass was determined to translate the financial packages into effective country programmes to get the “biggest bang for the dollar”.
In his first comments since he was appointed managing director earlier this month, van Trotsenburg also appeared to rule out going back to shareholders for further funding or embarking on more cost savings.
Last year shareholders approved a package of $7.5bn of paid-in capital for the International Bank for Reconstruction and Development (IBRD) that lends to middle income countries as well as a $52.6bn callable capital increase for IBRD, and $5.5bn paid-in capital for the International Finance Corporation that works with the private sector.
“Over the last couple of years, we have negotiated pretty much the most far-reaching financing packages ever for the bank,” he said. “These agreements were accompanied by a vision for the World Bank as a very proactive multilateral force in the development area.”
He said Malpass, who was the lead negotiator for the US Treasury on the financing package, was determined to ensure they delivered results in terms of improving the welfare situation in many countries, particularly by reducing poverty.
Malpass, who took over as president in April, has inherited the twin goals set by his predecessor, Jim Yong Kim, to end extreme poverty by 2030 and promote shared prosperity by improving the living standards of the bottom 40% of the population in every country. The bank is also focused on helping achieve the United Nations’ sustainable development goals.
Asked whether the huge task ahead might mean that the bank would need to go back to shareholders for further funding, van Trotsenburg said: “Any additional capital increase? No. That was also explicitly discussed during the capital increase discussions.”
He also played down fears of further cost cutting or reorganisations that have typically followed the appointment of a new bank president, saying that Malpass had put a lot of stress on continuity.
He said the finance package had included a commitment to find $1.1bn of savings by 2030. “We are on track and we are going to deliver on those commitments.”