The World Bank is seeking to prevent the publication of a study written for the Group of 20 major nations that recommends reducing the bank's capital requirements to increase its lending capacity, a source said.
The changes, as per supporters of the independent report, would free up much-needed funds for poorer countries at a time when high inflation makes it difficult for wealthy countries to increase their spending overseas.
The report is scheduled to be released this week, on the eve of a meeting of G20 finance officials in Indonesia. The sources said that the World Bank and other international development organisations, however, do not want the study to be made public because it makes suggestions to relax capital adequacy ratio standards. The World Bank has always resisted attempts to relax its stringent capital requirements, claiming that doing so would harm its reputation in the capital markets, imperil its AAA rating, and reduce its capacity to generate money for lending to underdeveloped nations. A spokeswoman for the World Bank stated that the organisation was "assessing" the report's suggestions.
The report, drafted by economists and development experts for the G20, said that the suggestions which were made for the G20 by economists and development specialists, calls for alterations to the multilateral banks' governing bodies. Another source added that while some improvements will take longer to implement than others, some of them might "move the needle in the short term," without going into further detail. The report was not reviewed independently by Reuters.
Another source said, adjustments were obviously required given the numerous, interrelated problems that the global economy is currently confronting and that will all require significant amounts of resources to address. "For important international and development needs, there is a tremendous amount of lending capacity to be acquired. That merits careful consideration and a focus on finding solutions."
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