The World Bank is exploring ways to boost its lending capacity and revenue without asking for fresh capital as part of a poverty-fighting strategy endorsed by member countries this month, the lender’s chief financial officer said.
Options include increasing some of the interest rates charged, loosening the limits on loans and offering new services, Bertrand Badre, who joined the bank in March, said in an interview.
The measures would accompany cost cuts and have yet to be discussed with officials from the 188 member nations before their next meeting in April, he said.
“If we are serious about objectives, we can do more with what we have on the table today,” Badre, a former CFO of Paris-based Societe Generale SA, said on Thursday. “If there is demand, can we supply the demand? We want to do everything possible without a capital increase.”
The review of the bank’s financial model is part of World Bank president Jim Yong Kim’s push to transform an institution he said has grown too fragmented, cautious and self-absorbed to accomplish its new goal of ending extreme poverty by 2030.
After shaking up the management ranks earlier this year, Kim has pledged to reduce the lender’s annual expenses by US$400 million over three years, including through job cuts.
“For too long, the World Bank itself has not followed its own advice,” Kim told finance officials in Washington on Oct. 11. “We have often postponed tough choices. That’s changing. We are taking our own medicine.”
The extra revenue can boost capital, enabling the bank to lend more, said Badre, one of two managing directors at the Washington-based bank.
“Pursuing higher loan charges from the borrowers without any commitment of new capital from the non-borrowers could prove to be a political challenge,” former deputy assistant secretary for development finance and debt at the US Department of the Treasury Scott Morris said.
A change in price would affect the unit that lends to middle-income countries, which committed US$15.2 billion in the fiscal year ended June 30, compared with US$20.6 billion a year earlier and less than half the US$32.9 billion committed in 2009.
Shareholders may want to discuss charging wealthier countries more, he said.
“Much more interesting is the debate that we need to have on the price of duration,” Scott said. “Do we need to pay more or less the same, or something very similar whether you borrow for five years or 20 years? Probably not.”
The board will also need to discuss what risks it would allow the bank to take with its balance sheet, Badre said.
It is getting some of the money it lends by borrowing on markets at low rates thanks to its “AAA” rating.
A measure of the bank’s financial strength has declined in the five years since it stepped up loans to emerging countries hit by the global financial crisis.
The lender seeks to keep its equity-to-loans ratio within a target range of 23 percent to 27 percent.
It was under 27 percent last year, down from nearly 38 percent in 2008.
The bank can also find sources of income by offering new services in the field of finance, or ad-hoc studies for countries that do not need to borrow money, but want expert analysis, according to Badre.
Asked about job cuts at the 15,000 employee institution, Badre said there is room to find savings on technology, travel and real estate first.
‘DECENT RESULTS’: The company said it is confident thanks to an improving world economy and uptakes in new wireless and AI technologies, despite US uncertainty Pegatron Corp (和碩) yesterday said it plans to build a new server manufacturing factory in the US this year to address US President Donald Trump’s new tariff policy. That would be the second server production base for Pegatron in addition to the existing facilities in Taoyuan, the iPhone assembler said. Servers are one of the new businesses Pegatron has explored in recent years to develop a more balanced product lineup. “We aim to provide our services from a location in the vicinity of our customers,” Pegatron president and chief executive officer Gary Cheng (鄭光治) told an online earnings conference yesterday. “We
It was late morning and steam was rising from water tanks atop the colorful, but opaque-windowed, “soapland” sex parlors in a historic Tokyo red-light district. Walking through the narrow streets, camera in hand, was Beniko — a former sex worker who is trying to capture the spirit of the area once known as Yoshiwara through photography. “People often talk about this neighborhood having a ‘bad history,’” said Beniko, who goes by her nickname. “But the truth is that through the years people have lived here, made a life here, sometimes struggled to survive. I want to share that reality.” In its mid-17th to
‘MAKE OR BREAK’: Nvidia shares remain down more than 9 percent, but investors are hoping CEO Jensen Huang’s speech can stave off fears that the sales boom is peaking Shares in Nvidia Corp’s Taiwanese suppliers mostly closed higher yesterday on hopes that the US artificial intelligence (AI) chip designer would showcase next-generation technologies at its annual AI conference slated to open later in the day. The GPU Technology Conference (GTC) in California is to feature developers, engineers, researchers, inventors and information technology professionals, and would focus on AI, computer graphics, data science, machine learning and autonomous machines. The event comes at a make-or-break moment for the firm, as it heads into the next few quarters, with Nvidia CEO Jensen Huang’s (黃仁勳) keynote speech today seen as having the ability to
The battle for artificial intelligence supremacy hinges on microchips, but the semiconductor sector that produces them has a dirty secret: It is a major source of chemicals linked to cancer and other health problems. Global chip sales surged more than 19 percent to about US$628 billion last year, according to the Semiconductor Industry Association, which forecasts double-digit growth again this year. That is adding urgency to reducing the effects of “forever chemicals” — which are also used to make firefighting foam, nonstick pans, raincoats and other everyday items — as are regulators in the US and Europe who are beginning to
RSS