World Bank may go fundless by mid-2010
Istanbul: The World Bank has appealed for more funds as it expects a second straight year of record lending due to the economic slowdown, it also warned that it may have to ration funds to only the poorest nations. World Bank President Robert Zoellick said that rising aid demand was set to strain its resources by mid-2010, forcing it to slash lending.
The bank expects another record year of lending to middle-income and creditworthy poor nations this year, of at least $40 billion, after $33 billion in 2008. Zoellick said the bank had entered the global economic crisis solidly capitalized, but the strong demand exceeded the $100 billion it was prepared to provide over three years.
The Development Committee, which mainly sets strategy for the anti-poverty lender, said the World Bank should be given sufficient resources to deal with the crisis as 90 million more people risk being forced into poverty by 2010.
Zoellick said that although the global economy may be pulling out of the worst recession in six decades, risks remain high, including from government plans to withdraw economic stimulus and debt rollovers that could be combined with a rise in interest rates. "We have no guarantee that the private sector, the main producer of jobs, will kick in. It is still not clear who will replace the U.S. consumer as a source of demand," Zoellick added.
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