Reform process Schulze and Yellen call for fundamental reform of the World Bank
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Development Minister Svenja Schulze and US Treasury Secretary Janet Yellen exchanged views on World Bank reform in a video conference.
Following their conversation, Development Minister Schulze stated:
“In order to successfully tackle global challenges such as the climate crisis, trillions of dollars in investments are needed – including in particular in developing countries and emerging economies. One key lever for this is a fundamental reform of the World Bank. Janet Yellen is an important ally in this endeavour. Last fall, she and I initiated the World Bank reform process. Together, we want to make the World Bank a real transformation bank that leads the way on climate action, pandemic control and crisis prevention and simultaneously reduces global poverty and inequality. In these times, it is only possible to successfully reduce poverty if climate action and social protection are addressed at the same time. Janet Yellen and I agree that the World Bank Spring Meetings in April must result in a binding schedule for reforms. The decision about the reform itself should be taken within this year, because we must not lose any time to tackle the global challenges we are facing.”
The World Bank is the world's largest provider of funding for sustainable development. It was founded in July 1944 along with the International Monetary Fund (IMF) at the Monetary and Financial Conference of the founding members of the United Nations in Bretton Woods, United States. Both institutions are specialised agencies of the United Nations and are headquartered in Washington, DC. The Bank and the Fund always hold their meetings at the same time. The next Spring Meetings will be in Washington, DC, on 10-16 April 2023. The Annual Meetings, which will be the key event for the envisaged reform, will be held in Marrakesh in October 2023.
The US is the largest shareholder of the lead institution of the World Bank Group – the IBRD – with 16.3 per cent of the shares. Germany, with 4.5 per cent, is the fourth largest. Within the German government, the BMZ has the lead responsibility for the World Bank. German Development Minister Svenja Schulze is Germany's Governor at the World Bank Group.
Global crises such as protracted drought, pandemics, floods and biodiversity loss have been changing the environment in which the World Bank makes its investments. These crises have impacts that transcend borders, and they lead to enormous costs, which developing and emerging economies often cannot shoulder on their own. The World Bank's current business model does not yet reflect any comprehensive responses to these global crises.
That is why, together with other governors, Minister Schulze proposed to the World Bank management in October 2022 that specific reforms be undertaken to make the World Bank fit for the global challenges of the future. After all, the World Bank has the potential, thanks to its great financial capacity, to achieve major progress on the necessary investments in the socially just transformation of the global economy and to lead the way in fighting poverty as well as climate change, biodiversity loss, and pandemics.
In response, the World Bank presented a Road Map for changing the institution. The proposals will now be discussed at the Spring Meetings. The reforms are to be defined in more specific terms before the World Bank Annual Meeting in the fall of 2023. The BMZ is actively working to help make the World Bank a key supporter of a just, socially and environmentally sound transformation.