Aurelia Butler

(Reuters) -World Bank Group President Ajay Banga on Tuesday said proposed new contributions from wealthy countries combined with balance sheet changes could boost the bank’s lending capacity by $100 billion to $125 billion over a decade.Banga told a Council on Foreign Relations event that the contributions would come outside the bank’s normal shareholding structure and regular country contributions to the International Development Association fund for the poorest countries.They would include U.S. President Joe Biden’s proposed $2.25 billion supplemental budget request for the World Bank, along with expected contributions from Germany, Japan, South Korea, Saudi Arabia and Nordic countries, he said.”I believe that if all this goes through, including the U.S., we could raise somewhere between $100 billion and $125 billion of extra lending capacity in the bank, which is pretty good. Not enough, but good,” Banga said.The total increase he described would include measures now underway to stretch the bank’s balance sheet, such as a leverage ratio increase agreed in April that would yield $50 billion in new lending over 10 years, a World Bank spokesperson said later.The bank is also examining other ways to expand lending, including providing more loan guarantees, lending against callable capital that is pledged but not paid-in, and special bonds that can serve as hybrid capital.MISSION SHIFTBanga said he expected shareholders at the World Bank’s annual meetings in Marrakech, Morocco, in October to formally adopt a new vision statement that expands its role beyond reducing poverty and promoting shared prosperity to incorporate global challenges such as climate, pandemics, food insecurity and fragility.”I think the twin goals have to change to being the elimination of poverty. But on a livable planet,” he said, adding that he expects support from all shareholders. Banga said that he has not yet held any discussions with the United States and China regarding a general capital increase and changes to the bank’s shareholding structure.China, India and Brazil got larger shareholdings in the bank in a 2018 capital increase and would likely want more say in a future capital increase, Banga said.The former MasterCard CEO, who took over the World Bank’s top job in June, has said he wants to build a “better bank” – increasing its urgency, focusing it on high-impact, replicable projects and expanding beyond its anti-poverty mission – before seeking a general capital increase from shareholders.He told the CFR event that he was impressed by the dedication and talents of the bank’s staff, but its organizational structure was “dysfunctional,” holding it back.Asked about the legacy of his presidency, Banga said: “I’m going to fix the plumbing … I want people to say when I’m gone, that I left the bank working much better than what I got it.” CAPITAL NEEDSBanga said G20 countries will struggle to agree with an experts’ report commissioned by the group that calls for a massive capital infusion into the World Bank and other multilateral development banks to help finance the $3 trillion in annual spending needed by 2030 for climate adaptation, resilience and mitigation.But he said the bank’s resources, even with moves to stretch its balance sheet, are woefully inadequate, with paid-in capital of just $22.6 billion for the World Bank’s International Bank for Reconstruction and Development over its 78-year history. “That is a pimple on a dimple on an ant’s left cheek compared to what we need in the world,” Banga said.Banga said that deeper conversations were needed on the World Bank’s future funding, but added that he would “not try and put an idealistic number out there” for the size of a future capital increase. More

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WASHINGTON (Reuters) – The U.S. Senate on Tuesday secured the votes needed to limit debate on advancing a temporary government funding bill that aims to avoid a partial government shutdown on Sunday.Voting was continuing on this first procedural move. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.Normal service resumed.Wall Street on Tuesday buckled under the weight of high and rising U.S. bond yields, leading a steep decline in global stocks and risk appetite that looks certain to push Asian markets lower at the open on Wednesday.A Bank of Thailand interest rate decision and the latest snapshots of Australian consumer price inflation and Chinese industrial profits are the highlights on the region’s economic and policy calendar.Investor sentiment is weak and fragile.The three major U.S. equity indexes all lost more than 1% on Tuesday, with the Dow Jones Industrials posting its worst day since March and the S&P 500 and Nasdaq both on track for their biggest monthly losses this year of 5% and 7%, respectively.The move in Treasuries was nowhere near as big as Monday’s. But another day of curve steepening, and 10-year nominal and real yields rising to new multi-year highs crushed stocks.Volatility on Wall Street is finally picking up too, and at 19.0 the VIX ‘fear index’ of implied vol is closer to long-term averages. Only a couple of weeks ago it registered its lowest daily close since before the pandemic.U.S. bond market volatility – a key driver of global market stability and liquidity – had its biggest rise since early July. This will reverberate into Asian markets on Wednesday.Investors in Asia will also note the significance of U.S. crude oil’s rise on Tuesday after a few days of consolidation, not for the 1% rise in itself, but because it lifts the year-on-year price rise to almost 20%.Bearing in mind that as recently as June oil was down 45% year-on-year, this is a remarkable turnaround and helps explain why longer-dated bond yields are rising so much.In Asia on Wednesday, Thailand’s central bank is expected to leave its key policy rate unchanged at 2.25% and likely through 2024, marking an end to a year-long tightening cycle, although a minority of economists polled by Reuters still expect one final hike.Despite inflation edging up slightly to 0.88% in August, it has been below the central bank’s 1% to 3% target range for four months in a row, suggesting the Bank of Thailand can stop hiking.Add this to the U.S. dollar’s global tear higher, the Thai baht has slumped to its weakest level since November. It is down almost 4% this month, on track for its second-biggest monthly fall in two years.Meanwhile, there is still no sign of Japanese authorities intervening in the FX market to support the yen, which hit a new 11-month low closer to the 150 per dollar level.Here are key developments that could provide more direction to markets on Wednesday:- Bank of Thailand rate decision- Australia consumer price inflation (August)- China industrial profits (August) (By Jamie McGeever; Editing by Josie Kao) More