WASHINGTON听–听Reforming the听奥辞谤濒诲听Bank‘s approach to risk听肠辞耻濒诲听unlock听苍别补谤濒测听$190 billion in additional urgently needed听濒别苍诲颈苍驳听for听诲别惫别濒辞辫颈苍驳听肠辞耻苍迟谤颈别蝉听without jeopardizing its AAA credit rating, a听蝉迟耻诲测听commissioned by the Rockefeller Foundation found.
The听蝉迟耻诲测, carried out by international finance analytics firm Risk Control, found the听产补苍办‘s two main听濒别苍诲颈苍驳听arms, the International听叠补苍办听for Reconstruction and Development (IBRD) and the International Development Association (IDA), have “significant headroom” to听产辞辞蝉迟听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听产补苍办‘s strict capital adequacy framework听肠辞耻濒诲听free up hundreds of billions in additional听濒别苍诲颈苍驳听to combat climate change and advance development.
The report, to be published early Wednesday, comes as the United States, China and other听奥辞谤濒诲听叠补苍办听shareholders prepare to meet in Marrakech, Morocco next month to review and advance initial聽.
The听蝉迟耻诲测听said the IBRD听肠辞耻濒诲听产辞辞蝉迟听濒别苍诲颈苍驳听by $162 billion over a decade or less before triggering a downgrade by global credit rating agencies, while IDA, which lends to the poorest听肠辞耻苍迟谤颈别蝉,听肠辞耻濒诲听产辞辞蝉迟听濒别苍诲颈苍驳听by $21 billion to $27 billion.
In fiscal 2023, which ended June 30, IBRD made net new听濒别苍诲颈苍驳听commitments of $38.6 billion, while IDA committed $34.2 billion.
It said IBRD and IDA听肠辞耻濒诲听产辞辞蝉迟听濒别苍诲颈苍驳听to听苍别补谤濒测听$900 billion if the rating agencies changed their processes and modified the allowance they make for “callable capital,” commitments by shareholders to supply additional resources in the event of severe financial problems.
Use of innovative approaches, including hybrid capital,听肠辞耻濒诲听provide further funds, the听蝉迟耻诲测听concluded, while securitizing 10% of IBRD and IDA’s portfolios听肠辞耻濒诲听generate additional听濒别苍诲颈苍驳听headroom of $29 billion to $41 billion.
The听产补苍办聽has already increased its leverage ratio to squeeze out an additional $50 billion in听濒别苍诲颈苍驳听over a decade, but聽奥辞谤濒诲听叠补苍办听笔谤别蝉颈诲别苍迟听聽said the听产补苍办听肠辞耻濒诲听potentially double that amount with international contributions.
Eric Pelofsky, vice president at the Rockefeller Foundation, said Risk Control conducted a math-based and transparent analysis that confirmed additional听濒别苍诲颈苍驳听capacity was possible, even beyond the levels mapped out to date.
鈥淭his is the math, absolutely as detailed and transparent as you听肠辞耻濒诲听possibly get, that says there鈥檚 more room,” he said. “It very clearly says that there are actions that can be done now while we consider other more long-term聽谤别蹿辞谤尘蝉听to the听产补苍办.鈥
Hans Peter Lankes, a professor at the London School of Economics and member of the G20 panel, said the听蝉迟耻诲测听provided “timely benchmarks” for shareholders and听奥辞谤濒诲听叠补苍办听management as they scoped out ways to听产辞辞蝉迟听lending.
Some experts argue that听诲别惫别濒辞辫颈苍驳听and emerging economies need $2.4 trillion per year to meet global climate challenges.
鈥淲e need this because the听诲别惫别濒辞辫颈苍驳听飞辞谤濒诲听is pitching off a cliff in terms of debt, available climate finance, development needs,” Pelofsky said. “And from a geopolitical standpoint, the听叠补苍办, the Fund, the regional development听产补苍办s are infinitely more transparent than some of the obvious alternatives.鈥
The Biden administration is pushing the听奥辞谤濒诲听叠补苍办听as a “credible alternative” to China’s overseas听濒别苍诲颈苍驳, which U.S. officials say is often not transparent and often uses collateralized loans that pose risks to聽肠辞耻苍迟谤颈别蝉听later. – Reuters
