G-20: World Bank chief aims to boost lending ability

World Bank President Ajay Banga said his bank is aiming to ramp up its lending capacity while maintaining a top, AAA credit rating, reports Bloomberg.

"We are building a better bank, but eventually we will need a bigger bank," Banga said in prepared remarks to the G-20 finance chiefs on Tuesday. "I am proud to announce the progress we have already made to stretch every dollar, while preserving our AAA credit rating."

The lender unveiled three new mechanisms which it said would boost its lending capacity. One is a proposed "portfolio guarantee program" where shareholders of the World Bank will step in if countries cannot repay their loans. The bank said in a statement that $5 in guarantees could generate $30 billion in lending over 10 years.

The second step is "raising hybrid capital from shareholders and other development partners." This will give "shareholders and partners an opportunity to invest in bonds with special leveraging potential," the bank said. Just $1 billion could increase the World Bank's lending capacity by $6 billion over a decade, it said.

The third mechanism is "extracting more value from callable capital." This is "a commitment from our shareholders to step in with new funds" in extreme circumstances, the bank said.

Rich-poor split could tighten 'grip of poverty': World Bank chief

The new head of the World Bank said Tuesday that growing divides between rich and poor nations risked deepening poverty in the developing world, at a meeting of G20 finance ministers in India, reports AFP.

Many countries are still recovering from the double blow of the coronavirus pandemic and fallout from Russia's war in Ukraine -- which hit global fuel and commodity prices.

Climate change, meanwhile, is most painfully affecting some of the poorest countries least able to cope.

Ajay Banga, president of the World Bank, said he feared a lack of progress was in danger of splitting the global economy, to the detriment of the world's poorest.

"The thing that keeps me up at night is a mistrust that is quietly pulling the Global North and South apart at a time when we need to be uniting," Banga told the two-day meeting of finance ministers and central bank chiefs in Gandhinagar, Gujarat state.

"The Global South's frustration is understandable. In many ways they are paying the price for our prosperity," said Indian-born Banga, a naturalised American citizen who took up the bank post last month after being nominated by US President Joe Biden.

"When they should be ascendant, they're concerned promised resources will be diverted to Ukraine's reconstruction, they feel energy rules aren't applied evenly, constraining ambition, and they're worried the grip of poverty will pull down another generation."

The World Bank said it is working to increase its financial capability -- including by raising hybrid capital from shareholders -- to spur growth and jobs, but said the future economy could not rely on expansion at the cost of the environment.

"The simple truth is: We cannot endure another period of emission-intensive growth," Banga said.

Indian Finance Minister Nirmala Sitharaman, chair and host of the get- together, launched talks on Monday by reminding leaders of their responsibility "to steer the global economy towards strong, sustainable, balanced and inclusive growth".

The United States says efforts to reform multilateral lenders such as the World Bank and other regional institutions could unlock $200 billion over the next decade.

Little progress on debt

Debt restructuring deals for low-income nations have been a key focus of The Group of 20 major economies, but officials suggest there has been little headway.

China, the world's second-largest economy and a major lender to several stressed, low-income countries in Asia and Africa, has so far resisted any one-size-fits-all debt restructuring formula, officials said.

More than half of all low-income countries are near or in debt distress, double the amount in 2015, US Treasury Secretary Janet Yellen said.

Yellen on Sunday said a deal on Zambian debt had taken "too long to negotiate", but added she hoped debt treatments for Ghana and Sri Lanka could be "finalised quickly".

Finance ministers from regional rivals and neighbours India and China met early Tuesday, without commenting to reporters.

The G20 talks have also focused on multilateral development banks' reform, cryptocurrency regulations, and easier access to financing to mitigate and adapt to the impact of climate change.

A newly agreed first step on a fairer distribution of tax revenues from multinational firms -- reached by 138 countries last week – is also set to be delivered.

Multinationals, especially tech firms, are currently able to shift profits easily to countries with low tax rates even though they carry out only a small part of their activities there.

IMF says China showing more openness at debt talks

International Monetary Fund Managing Director Kristalina Georgieva said China was coming with more openness to the debt relief talks for stressed developing nations held during the Group of Twenty meetings for finance chiefs, reports Bloomberg.

Participants have spent two days in Gandhinagar, India, to attempt to build on a recent debt-restructuring framework for Zambia and look at ways to reform multilateral development banks and encourage sustainable finance.

It's growing increasingly unlikely the group will be able to coalesce around a joint communique, or at least a statement on the discussions by the confab's chair. India is hosting the talks, as rotating head of the G-20 this year.

With no major breakthroughs anticipated at the meetings, outside advisers and the heads of international financial organisations were calling for more concerted action.

The G-20 members have been deadlocked on debt relief for developing nations, after conceiving a coordinated plan known as the Common Framework in 2020. Beijing in the past has urged multilateral lenders such as the World bank to participate in taking haircuts.

Georgieva said the IMF wants to see faster movement in debt resolution for Ghana, Chad and other countries, saying creditors want treament to be fair.

"Very often there's a feeling that I'm getting a worse deal than others," she said.

G20 meeting in India to end without communique as Ukraine war divides bloc

The two days of talks between economic and finance policymakers from the Group of 20 nations will wrap up on Tuesday without a joint statement due to differences between major powers over the war in Ukraine, according to Indian officials hosting the meeting, reports Reuters.

During its presidency of the G20, India is hoping to forge a consensus on reforms for multilateral banks, a global guiding principle on cryptocurrencies and accelerate the debt resolution of vulnerable countries, but the Russia-Ukraine conflict has cast a long shadow over global diplomacy.

"All our agenda has been moving forward and accepted by everyone," an Indian government official, who requested anonymity, said on the last day of talks in the western city of Gandhinagar.

Most western countries including the US, United Kingdom, Germany and France had pushed for a firm condemnation of Russia and the war in Ukraine, whereas Russia and its friend China had opposed any such move, the official added.

And, India, as host nation, has been unable to draft a final communique acceptable to all members, the official said, as some countries insisted on calling the conflict a war, while Russia refers to its campaign, now in its sixteenth month, as a "special military operation".

India has adopted a largely neutral stance, declining to blame Russia for the invasion and urging a diplomatic solution, while also increasing purchases of discounted oil from Russia.

On Saturday, an Indian official told Reuters that brokering peace between Russia and Ukraine was beyond the remit of the G20 and such efforts would be best undertaken by the United Nations and through bilateral negotiations.

Earlier this week, US Treasury Secretary Janet Yellen said that Washington's support for Ukraine was unequivocal and one of its core goals this year was to combat Russia's efforts to evade sanctions.

The gathering in the western state of Gujarat was the G20's third finance track meeting under India's presidency. India has not been able to forge a joint statement in any of the key tracks since it took over the presidency of G20 last December.

Some officials said the acrimony was less than they had seen during the first meetings held in Bengaluru in February, even though countries had remained firm on their stance.

At the close of the Bengaluru meetings, the lack of consensus among the G20 members meant India resorted to issuing a "chair's summary and outcome document" in which it simply summed up the two days of talks and noted disagreements.