World Bank to cut $400 million from budget in reorganization
Washington: The World Bank plans to cut USD 400 million from its budget as part of a sweeping reorganization to make the global development lender more efficient and responsive, the bank's chief financial officer said on Monday.
The savings, which have not yet been publicly disclosed, are part of the World Bank's first major strategic realignment in 17 years. The USD 400 million figure will be presented to the World Bank's member countries later this week during its annual meetings, along with a new strategy to focus the institution on its poverty-fighting goals.
The USD 400 million in savings will be phased in over three years and mark an 8 percent cut from the bank's current USD 5 billion in annual expenses, Bertrand Badre, who is also the bank's managing director for finance, said in an interview.
Badre said the ultimate goal of the cuts, along with planned increases in revenue, was to help the bank grow and better serve governments.
Long criticized for a slow bureaucratic process for approving lending, the World Bank has more recently had to contend with greater competition for development funds. Many middle-income countries, for example, can rely more on private funding and bilateral loans as they grow.
In response, World Bank President Jim Yong Kim has launched the first new strategy for the lender since 1996, aiming to make it more selective and better attuned to the needs of the governments it serves.
The strategy should make it easier for the bank to meet its twin goals of eliminating extreme poverty by 2030 and boosting the incomes of the poorest 40 percent of people in each country.
In its strategy, the bank said it was looking at ways to trim its budget while putting more funds into priority areas, including "transformational" projects such as large-scale energy investments.
"The point is, if we are serious about our mission, if we are serious about meeting our client expectations, we need to be able to do more," Badre said. "By increasing our financial strength, we're in a better position to answer our clients."
He said every USD 100 million reinvested into the bank's operations could help mobilize another USD 1 billion to spend on development.
The bank has not yet outlined exactly where it will find the savings, although Badre suggested travel policies, information technology and real estate would be good places to start. Many World Bank employees were already sending him suggestions.
"Nobody likes to cut costs," he said. "That's pretty human. But the reality is that everybody is aware that we could do things better."
The planned savings will come alongside revenue increases so the bank can boost its overall funds for development, he said. The bank is considering relying more on fees for advisory services and on money from trust funds, or earmarked funds from governments for specific projects.
Badre is looking across all the bank's activities to find ways to boost revenue, including at lending, investment and provision of data. He said the bank should also be more creative in finding new financial tools to help countries develop, such as reinsurance schemes or instruments to help governments deal with the effects of climate change.
The changes in how the Bank is organized, how it funds itself and what it focuses on have caused some consternation among its employees, who fret about job cuts and unclear lines of command.
Badre, who came to the bank last year after serving as chief financial officer at the French bank Societe Generale, said his ultimate goal was to make budget discussions a more normal part of how the bank operates.
That aligns with Kim's efforts to make bank staff less averse to risks and more flexible.
"The (new) strategy will force us to make choices. And this needs to be done through the budget," he added. "And then the budget will force the change on a regular basis and not every 15 years."
More from India
More from World
More from Sports
More from Entertaiment
- 7th Pay Commission recommends 23.55% hike in salary for central govt employees; minimum salary set at Rs 18,000 per month
- Shocking fact of pay 'hike' in 7th Pay Commission recommendations!
- Full Report of 7th Pay Commission
- Unbelievable! Clean and healthy meals on Indian Railways at just Rs 20
- E-commerce war: Paytm Diwali sale offers 100% cashback on 25 million products