Malpass said the International Bank for Reconstruction and Development (IBRD) arm could lower its ratio of equity to loans by one percentage point to 19%.
Lowering the equity-to-loan ratio would free up more resources at a time of mounting global challenges, such as the war in Ukraine, he said. The board was expected to vote on the issue by April meetings of the bank and the International Monetary Fund.
The IBRD decided in December to raise its sustainable annual lending ceiling by $2 billion, starting in fiscal year 2024, and Malpass said there could be further expansion. Its loan limit for fiscal year 2022 was $37.5 billion.
Mr Malpass announced his resignation from the bank on Wednesday, amid growing pressure from the US Treasury to accelerate the bank’s reform. He told Archyde.com on Thursday, in his first interview since announcing his departure, that the bank’s work on its “evolution roadmap” was well advanced.
The bank’s management has already discussed the 19% proposal with credit rating agencies, and it was the most likely outcome of ongoing talks, a source familiar with the matter said.
The World Bank has long opposed changes to its capital adequacy rules, fearing it could jeopardize its AAA credit ratings, but two of the three major agencies said last year that some changes were possible without tarnishing. the ratings.
The bank’s board met on Thursday to discuss the proposal and other options, a second source said. “We recognize that it could be lowered in a financially viable way,” the source said.
The U.S., the bank’s largest shareholder, did not immediately comment on the proposed ratio change, but has been pushing the bank for months to take bolder and faster action to free up the resources it needs. urgently.