World Bank poverty reduction work should include growth goals and address climate change, pandemics and other global challenges, asserted Treasury Secretary Janet Yellen. Speaking at the Center for Strategic International Studies, she presented U.S. priorities on a World Bank reform process of the World Bank’s vision, operation and finances.
“It’s time for these banks to address global challenges head on – with the urgency and scale that is required,” Secretary Yellen said. “We have begun the evolution of the World Bank. Next, we expect to take this agenda to the regional development banks.”
The U.S. Treasury Secretary added that this does not mean shifting the Bank away from its traditional work, instead her remarks were about expanding the work and creating the right incentives for countries to tackle global challenges.
“The costs and benefits of addressing global challenges are diffuse. They don’t all accrue to a single country,” said Secretary Yellen. “The costs of failing to address these global challenges may be spread across the world. Nevertheless, these costs have a serious impact on national and local realities. They are very real for the people who face them. Many times, these are the world’s poorest and most vulnerable.”
“The pandemic, war and inflation are increasing poverty around the globe,” said Eric LeCompte, Executive Director of the religious development group Jubilee USA Network. “Yellen knows we’ve lost decades of work on development and that the World Bank and development banks can do more if we can make these banks more effective.”
Last October, the U.S. led calls for a reform process of the World Bank. The agenda includes assessing proposals to increase bank lending by hundreds of billions of dollars.
“As we need development banks to do more, they will need more resources and capital,” added LeCompte. “We also need them to be more innovative to deal with multiple, growing crises.”
In a 2021 letter to President Joe Biden, the U.S. Conference of Catholic Bishops and Jubilee USA Network called for significantly increasing multilateral development bank lending power. In March of that year, at a roundtable Jubilee USA convened with Secretary Yellen, some of America’s highest-ranking religious leaders delivered the same request to her. The leaders represented the Catholic, Methodist, Lutheran, Presbyterian and United Church of Christ Churches, as well as the Union for Reform Judaism.
“If we are going to be effective in reducing poverty in countries then we need debt to be reduced and more aid delivered to countries,” stated LeCompte. “Debt relief and sufficient economic aid must go hand and hand.”
Addressing a question on debt, Secretary Yellen remarked how debt restructuring not only serves the interests of the borrowers, it also serves the interests of the creditors. She elaborated that where debt reaches an unsustainable level, it stops the country from growing, developing and investing, and thus it cannot make payments.
“We know we can succeed,” Secretary Yellen said. “The world has gone through tremendous change in the nearly 80 years since the founding of the World Bank. The multilateral development bank system has responded to these changes by evolving.”
“I am confident that we will be able to deliver,” the Treasury Secretary concluded.