Global Policy Forum

Washington -- The World Bank, under fire from demonstrators who say it neglects the poor, may have to ration its lending to key countries unless its members find more cash, according to papers to be discussed next week. A World Bank document for next Monday's meeting of the bank's decision-making Development Committee said the bank's capital structure was sound.

But the bank wanted member countries to consider a capital increase, which would allow the bank to respond to new world economic problems, and to borrow more on financial markets and lend more to member countries. The report admitted that it would take "a lead time of several years" to agree on a capital increase for the global lender, which lent countries billions of dollars during the world financial crisis of 1997-99 and which first put in a tentative request for extra cash last year.

"The World Bank's financial capacity remains a cause for concern for reasons that go beyond the global shock scenario... New lending to many large borrowers which are home to most of the global poor may be constrained," the report said. "While a number of shareholders have agreed on the need for enhancing (the World Bank's) financial capacity, there is as yet no consensus on the timing for initiating formal discussions on options that involve contribution of capital resources by shareholders or borrowers."

The bank said that it would try to get by on existing resources, but stressed there were limits to what could be done. "We have not formally asked our shareholders for more money," said Mr Teng Hong Cheah, of the World Bank's finance department. "But if they want us to do more, at some point in the future we would need more capital."

Other items on the committee's agenda include the future role of the bank, which was set up to speed reconstruction after World War II and which now concentrates on long-term loans to poor countries in Africa, Latin America, Asia and eastern Europe and the former Soviet Union.

Ministers will also review a document arguing that free trade plays a critical role in boosting growth and curbing poverty and a second paper looking at ways the bank can respond to the spread of Aids.

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