World Bank's Kim says Trump likes lender's private capital plans
WASHINGTON - In an era of shrinking government contributions to development financing and "exploding" loan demand in poor countries, World Bank Group president Jim Yong Kim is looking to the private sector for help.
And he said U.S. President Donald Trump likes the idea.
Kim told Reuters in an interview on Thursday that he is looking to mobilize hundreds of billions of dollars now parked in low-yield government bonds for development finance, earning higher returns for investors. The World Bank would pave the way to reduce risk.
"Speaking with President Trump directly, I told him about the need to make this shift, to work more effectively with the private sector. He was very enthusiastic about that," Kim said. "I'd love to see President Trump champion this approach to development finance."
The potential new business model is part of Kim's pitch to promote the multilateral lender's role as a facilitator in developing new markets - and attract political support and new capital along the way.
Trump's initial budget plan in March floated a $650 million funding cut multilateral development banks over three years. However, it is Congress, not the White House, that ultimately decides spending levels.
"What I'm trying to convince everyone of is, if we get this right, we can actually spur global growth, create markets for American products, create opportunities for American companies," Kim said of his pitch to Congress, the White House and other stakeholders.
The new business model would aim to use the World Bank Group's technical expertise and guarantees to prepare and "de-risk" projects and markets to make them "bankable" for risk-averse investors such as pension funds and insurance companies, Kim said.
Work by the lender's International Finance Corp arm in Zambia last year to set up auctions for private firms to build solar generating plants provides a model for his proposed approach.
The bank estimates that some two-thirds of current manual labor jobs in developing countries will be eliminated by automation in future years so Kim said massive investments are needed now to help develop new jobs.
"Our job should be to use our money to prepare the country to bring in lots more money that's ready to go but is not moving because of the perception of risk or because the projects are not," Kim said.
Kim said he is encouraged by his engagement so far with the Trump administration, including interest from Ivanka Trump in the bank's work on women's issues.
"We're interacting with them quite a lot and they're asking us very specific questions about how we think about solving certain problems," he said. REUTERS