The new head of the World Bank said on Monday he was willing to let the global development lender advise troubled developed nations like Greece, a major shift for an institution that has focused on the world’s poorest.
While Jim Yong Kim emphasised that his top priority would be to protect developing nations at a “pivotal moment” for a world economy that is losing steam rapidly, he said the bank could also deploy its technical know-how to help richer nations with structural problems.
“We only go into countries when asked, but I feel the kind of expertise we have could be relevant in many, many countries in the world, including high-income countries,” the Korean-born American told reporters on his first day on the job.
“My staff feel they have the relevant experience that could add value … if that is the case and we are asked, I could be open to the possibility” of helping Greece, he added.
Former World Bank chief Robert Zoellick had pushed back at the idea of the bank getting involved in Greece. He said on June 14 that if the bank had gone in “as a reform taskmaster for the Greek government … it might not be as productive for Greece as it would be harmful to the bank.”
Still, many development experts argue the bank’s decades of experience working with governments to improve their ability to improve tax collection, social programs, combat corruption and attract investment could help countries like Greece or Portugal that struggle with these issues.
An international bailout for debt-burdened Greece has kept the country in the euro zone but has come at the price of deep spending cuts, increased poverty and unemployment.
One idea bank officials have discussed is for the European Commission to fund World Bank technical advice in Greece. By charging for its advice, the World Bank would boost its own revenues at a time lending returns are set to decline as more borrowers gain access to capital markets. Big bank shareholders, like the United States, are also cutting budgets and would be hard pressed to persuade their legislatures to pony up more money for the World Bank.
“We are not talking about the World Bank investing massive amounts of finances in high-income countries,” Kim said. “Where we feel we can add value is in the technical support around some of the structural issues that some countries are facing.”
The idea already has been informally debated among the bank’s shareholders. “I would encourage the bank to do it as long as it does not involve resources that are meant to go to developing countries,” said one World Bank board official from a large developing country.
