Priority is to battle poverty in developing nations
WASHINGTON - The new head of the World Bank said on Monday he was willing to let the global development lender advise troubled developed nations like Greece, a major shift for an institution that has focused on the world's poorest.
While Jim Yong Kim emphasized that his top priority would be to protect developing nations at a "pivotal moment" for a world economy that is losing steam rapidly, he said the bank could also deploy its technical know-how to help richer nations with structural problems.
"We only go into countries when asked, but I feel the kind of expertise we have could be relevant in many, many countries in the world, including high-income countries," the Korean-born American told reporters on his first day on the job.
"My staff feel they have the relevant experience that could add value ... if that is the case and we are asked, I could be open to the possibility" of helping Greece, he added.
Former World Bank chief Robert Zoellick had pushed back at the idea of the bank getting involved in Greece. He said on June 14 that if the bank had gone in "as a reform taskmaster for the Greek government ... it might not be as productive for Greece as it would be harmful to the bank."
Still, many development experts argue the bank's decades of experience working with governments to improve their ability to improve tax collection, social programs, combat corruption and attract investment could help countries like Greece or Portugal that struggle with these issues.
An international bailout for debt-burdened Greece has kept the country in the euro zone but has come at the price of deep spending cuts, increased poverty and unemployment.
One idea bank officials have discussed is for the European Commission to fund World Bank technical advice in Greece.
By charging for its advice, the World Bank would boost its own revenues at a time lending returns are set to decline as more borrowers gain access to capital markets. Big bank shareholders, like the United States, are also cutting budgets and would be hard pressed to persuade their legislatures to pony up more money for the World Bank.
"We are not talking about the World Bank investing massive amounts of finances in high-income countries," Kim said. "Where we feel we can add value is in the technical support around some of the structural issues that some countries are facing."
The idea already has been informally debated among the bank's shareholders. "I would encourage the bank to do it as long as it does not involve resources that are meant to go to developing countries," said one World Bank board official from a large developing country.
WORLD BANK READY TO HELP
Kim, a physician and former head of Dartmouth College in New Hampshire, has relied on support from U.S. Treasury advisers as he prepared for his new job.
He takes the presidency at a time the euro zone debt crisis is beginning to exact a wider global toll.
Growth is slowing in emerging economies from China to India to Brazil, with developing countries feeling the effects of tighter bank lending and a drop in trade financing - problems Kim will have to address as the head of the world's top development lender.
As Europe struggles to get a handle on its crisis, new manufacturing data in China, the world's second-largest economy, o n Monday showed a further decline in export orders.
Slowing global growth will affect already scarce government revenues in the poorest countries, which could force them to turn to the World Bank for more financial assistance.
World Bank assistance to middle-income countries could also increase if many find themselves unable to obtain the financing they need in the market.
The World Bank stepped up lending to developing countries in 2009 as the global financial crisis spread, providing a record $100 billion to borrowers.
Kim said the World Bank financial position was "very strong" and it was ready to support middle income and poor countries should they need assistance again.
"We feel that especially in low and middle-income countries we are ready to support those countries," he said.
Unlike previous heads of the World Bank, Kim is not a politician, banker or career diplomat. Instead, his life work has focused on bringing healthcare to the poor, whether fighting tuberculosis in Haiti and Peru or tackling HIV/AIDS in Russian prisons.
Addressing critics who see his lack of economics training as a weakness, Kim said he had worked in development throughout his career and has extensive experience working with the World Bank tackling difficult problems in poor countries.
"I feel that I share a passion for development and poverty alleviation with the World Bank staff and come into the organization feeling very close to them in terms of why they come here," he said.