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To: goldsnow who wrote (32383)	4/22/1999 9:48:00 PM
From: lorne	Respond to of 116771

World Bank faces funding crisis By Alex Brummer, Financial Editor in Washington Friday April 23, 1999 The president of the World Bank, James Wolfensohn, said yesterday that the bank could face a funding shortfall of more than $2bn as a result of Group of Seven plans to extend the debt reduction initiative to up to 42 nations. The new plans would cost about $4.5bn, Mr Wolfensohn said, which means 'we have got to find another $2bn.' This was equivalent to 10% of the bank's capital. Bank officials later said that the extra cash needed would be even more - probably just under $4bn - because Mr Wolfensohn was talking in terms of net present value. Mr Wolfensohn welcomed the enthusiasm among western finance ministers for improving the debt reduction plan but said that the question was: how will it be financed? The bank's contribution to debt relief is funded from its annual income of just over $1bn a year, but it fears that its resources will not stretch that far. The bank is looking at a series of means of funding the extra relief, including reorganising lending through its soft-loan window for poor countries, the International Development Association; raising the charges it makes to better-off countries and seeking increased assistance from donor countries. The bank's cash shortfall comes at a time when its balance sheet is being put under pressure by its increased lending to emerging-market economies as a result of the global financial crisis of the past two years. Mr Wolfensohn said growth among developing countries was falling and this meant world poverty would worsen. In Russia, some 40 million people were living on less than $2 a day. newsunlimited.co.uk