2018 World Bank Capital Increase Proposal (CRS Report for Congress)
| Release Date |
Dec. 14, 2018 |
| Report Number |
IF10895 |
| Report Type |
In Focus |
| Authors |
Martin A. Weiss |
| Source Agency |
Congressional Research Service |
Summary:
On October 12, 2018 World Bank members, including the
United States, approved a $60.1 billion capital increase for
the World Bank’s main lending facility, the International
Bank for Reconstruction and Development (IBRD), which
would raise the IBRD’s capital from $268.9 billion to $329
billion. World Bank members also endorsed a $5.5 billion
capital increase for the International Finance Corporation
(IFC), the World Bank’s private-sector lending arm, which
would more than triple the IFC’s capital base from $2.57
billion to $8.2 billion. Congress would need to fully
authorize and appropriate funds for any U.S. participation
in the proposed capital increase. In testimony before the
House Financial Services Committee in December 2018,
Treasury Undersecretary David Malpass committed to work
with Congress over the coming months to prepare the
necessary legislation to move forward with the U.S.
contribution to the capital increase.
According to the Bank, the capital increase would allow the
Bank to provide an annual average of $100 billion in
development support. Over the past five years (2013-2017),
total World Bank annual support averaged $59 billion.
Bank leadership is aiming for final approval of the capital
increase package at the October 2018 annual meetings.
The Trump Administration supports the capital increase,
which will be accompanied by reforms designed, in part, to
address a longstanding concern for many U.S.
policymakers: high levels of World Bank lending to uppermiddle
income countries, especially China. In a statement at
the 2017 IMF and World Bank spring meetings, U.S.
Treasury Secretary Steven Mnuchin stated that, “the
relationship between the World Bank and more
creditworthy countries [such as China] should mature over
time, with the absolute level of borrowing declining as
countries become better able to finance their own
development objectives.” Mnuchin also highlighted the
issue of shifting World Bank lending to poorer countries
through income-based country lending allocation targets
and differentiated loan pricing.
