Global Geo-political Series: U.S. wants World Bank to overhaul lending to China before entertaining capital increase

The Trump administration will not entertain a request for an increase in funding to the World Bank unless the bank reevaluates its own balance sheet first. Jim Yong Kim, World Bank’s current President has been pushing for extra financial resources and he was hopeful of either receiving it or members agreeing to a timetable to enhance the bank’s finances. However, the Trump administration seems to have thwarted Mr. Kim’s hopes.

Under the Trump administration, the United States has taken up a combative attitude towards global organizations like the United Nations, NATO, and World Trade Organization. Trump’s hard stance towards NATO has already prompted many European countries to pour in billions of dollars that was not previously paid. Now, the administration wants the World Bank to reexamine its balance sheet and overhaul its lending to middle-income countries, especially China, which is currently the bank’s biggest borrower.

According to Reuters, a senior Treasury official has told the news organization that the World Bank will need to do substantial work on its balance sheet before the idea of fund increase is entertained because the United States contribute little less than 1/6th of the bank’s budget and the money is going to countries that have ample borrowing opportunities.

Trump administration’s opposition to World Bank’s lending practices is likely to limit the organization’s ability to lend further to countries like China or the ones enjoying a very high trade surplus with the United States.