World Bank Annual Meetings “World Bank needs to restructure to address global challenges of the future”, says Development Minister Schulze
Press release 12 October 2022 | Together with other shareholders, Germany advocates a fundamental reform of the World Bank. This was announced by German Development Minister Svenja Schulze in her capacity as Germany's Governor to the World Bank prior to her departure for the Annual Meetings (External link) in Washington. She said the Bank needed to focus more on addressing global crises – that is, efforts in fields such as climate action, biodiversity conservation and pandemic preparedness. The Bank, she noted, had to use its great financial capacity to act as a leader, as capital needs for a socially just transition toward a climate-neutral global economy were huge. As part of Germany's G7 Presidency, Development Minister Schulze has drafted proposals for reform together with the U.S. and other shareholders. The proposals will now be discussed in Washington. Another key focus which Schulze will pursue during the Annual Meetings is social protection. She will also have meetings on climate finance, food security and feminist development policy.
Schulze said, “The World Bank needs to restructure to address the global challenges of the future. Its current model, which is mainly based on demand from borrowing countries, is no longer appropriate in this time of global crises. Challenges and investment needs are so great that the model needs to be adjusted. This means, for example, that the World Bank needs to provide incentives for countries to use its loans to address global challenges. It has to make it more attractive for developing countries to use World Bank loans for climate action and biodiversity conservation. One option would be climate lending on better terms. Another would be targeted budget support for governments which want to pursue policy reforms to make their economies climate neutral. My goal is a World Bank which is well prepared to address global crises such as climate change and which is able to share its knowledge worldwide.”
Together with the U.S. and other shareholders, Development Minister Schulze proposed a number of reforms to the Bank's management with a view to improving the World Bank's preparedness for future global challenges. The group of shareholders has called on the Bank to present a roadmap before the end of this year to show how it can gear its vision, incentive structure, operational approach and financial capacity towards global challenges.
Further topics on the agenda of the Annual Meetings will be climate finance, the food and energy crisis, and setbacks in the field of education and training caused by the pandemic. There will also be discussions about how to make societies more resilient to crises and more ready to embrace necessary change. To that end, Minister Schulze is proposing stronger support for social protection worldwide.
Schulze said, “The pandemic has shown us that in places with social safety nets, all are able to weather a crisis better. Social protection is the best form of crisis preparedness. However, at present there are four billion people – about half of the global population – who have no social safety net to fall back on. If they lose their income, if their home is destroyed, if they are faced with disability or become unable to work, they have to fend for themselves. That is why I will use my stay in Washington to lobby for the development and expansion of social protection systems.”
Representing the German G7 Presidency, the Minister will convene a meeting in Washington with the most important global players for social protection, the World Bank and the International Labour Organization (ILO). Together, they want to develop a joint action plan by the end of November. An international conference is to be held in Berlin next year to place the issue prominently on the agenda. At the global climate conference in Egypt in November, too, Schulze wants to put a focus on social protection systems to protect people in developing countries against the impacts of climate shocks.
Like its twin institution, the International Monetary Fund (IMF), the World Bank is a specialised agency of the United Nations. It has set itself the goal of reducing poverty and boosting shared prosperity in the world. It thus helps achieve the UN sustainable development goals. Its Annual Meeting is always held in conjunction with that of the IMF. Within the German government, the BMZ has the lead responsibility for the World Bank. Germany is the World Bank's fourth largest shareholder. It holds 4.2 per cent of the voting power and has its own seat on the Board of Governors, which consists of 25 people. It also has its own Executive Director on the Executive Board. The largest World Bank shareholder is the United States (15.6 per cent).