Spring Meeting At World Bank Spring Meeting, Germany calls for biggest-ever reform of the Bank
Press release 11 April 2023 | At this week's World Bank Spring Meeting in Washington, Germany will be calling for a fundamental reform of the World Bank. The agenda of the meeting of World Bank shareholders on Wednesday includes decision-making on the first steps to prepare the reform and on its further course. The World Bank, as the world's largest provider of development finance, is to make more effective use of its capital in order to increase its contribution toward tackling global crises such as climate change, degradation of the natural environment, and pandemics. Such improved effectiveness of capital utilisation would mobilise several billion US dollars a year in additional funding for efforts such as climate action. In October 2022, Development Minister Svenja Schulze took the initiative for the reform together with the United States and other stakeholders. The German delegation to the Spring Meeting will be headed by BMZ Parliamentary State Secretary Niels Annen.
Niels Annen, Parliamentary State Secretary to the Federal Minister for Economic Cooperation and Development
Copyright© BPA/Steffen Kugler
Annen said, “This is about paving the way for the biggest reform of the World Bank since its foundation. We want the Bank to become a transformation bank that facilitates progress on addressing global crises. Ending poverty will remain the core mandate of the Bank, but in a broader sense. In these times, it is only possible to reduce poverty successfully if global challenges such as climate change, biodiversity loss and pandemics are addressed at the same time, because the poor countries are most affected by the impact of these crises. I expect the Spring Meeting to bring some initial decisions on how to make the World Bank fit for the global challenges. We also need a binding timetable. By the Annual Meetings in October, the key elements of the reform of the Bank's business model should be ready for decision.”
The World Bank's current business model provides inadequate incentives for national interventions that benefit the entire world, such as efforts for an energy transition and for robust health systems that contain pandemics. Global institutions like the World Bank should lend particular support to such interventions in the future. The World Bank has a significant role to play in tackling global crises, as its financial capacity of about 100 billion US dollars a year enables it to facilitate major progress on the investment needed for the social and environmental transformation of the global economy. The Bank also sets standards for other development banks and private providers of funding.
That is why, in October 2022, Development Minister Schulze – together with the US and other stakeholders – asked the World Bank's management to pursue specific reforms along these lines.
In response, the Bank's management presented some initial proposals, which will now be discussed by shareholders at the Spring Meeting. The reforms are to be defined in more specific terms in time for the World Bank Annual Meeting in Marrakesh in October 2023.
Germany attaches key importance to three demands in particular.
First, the World Bank needs a new guiding vision. It needs to maintain its previous goals – eradicating extreme poverty and boosting shared prosperity –, while adding efforts to address global crises such as climate change and biodiversity loss.
Second, the World Bank needs a new financing and business model. This includes giving countries incentives for investments that benefit not only their own people but also the global population – for example by means of more favourable lending conditions for projects on climate action and pandemic preparedness.
Third, the World Bank needs to mobilise more funding. Just by using its current capital, it could raise several billion US dollars a year in additional funding for development – without jeopardising its AAA rating.
Annen said, “I want to discuss all these issues in Washington, especially with developing countries. One thing is clear: none of this must happen to the detriment of grants and highly concessional funding for low-income countries. The poorest countries must reap the benefits of this reform.”
The official talks on the Bank's reform will be held on Wednesday afternoon (Washington time). The agenda of the Meeting, which covers several days, also includes support for Ukraine, a stronger role for social protection systems in order to better cushion shocks caused by global crises, the coordination of global food security, and efforts to strengthen women's and girls' rights in the field of health.