World Bank to Increase Lending Capacity to Address Climate Change

The World Bank plans to change its lending models, increase its lending capacity, and introduce new lending tools to address global crises, especially climate change, as reported by Reuters on January 2. Specifically, the World Bank has sent a roadmap document to its shareholder governments as the first step in the negotiation process to change the mission of the bank and move its financial resources away from the country- and project-specific lending models it has employed since its founding. The World Bank is seeking an increase in capital to boost its lending capacity for climate change, health care, and other pressing global needs. It is planning to have detailed proposals ready for approval by the joint World Bank and International Monetary Fund Development Committee by October 2023.

Multilateral development banks such as the World Bank have faced increased pressure to modify their model recently as the developing world faces pressing threats from global issues such as inflation, debt burden, energy and food security, and climate change. In October 2022, US Treasury Secretary Janet Yellen urged the World Bank Group and others to increase lending to address global issues and utilize more private capital, concessional loans, and grants to finance projects that benefit the whole world, such as assisting nations in moving away from coal power.

Sources:

https://www.reuters.com/business/sustainable-business/world-bank-seeks-more-funds-address-climate-change-other-crises-document-2023-01-03/

https://www.reuters.com/markets/us/yellen-calls-world-bank-revamp-tackle-global-challenges-2022-10-06/