SINGAPORE – Japan indirectly urged China on Monday to “graduate from” World Bank loans for development because it now has stable access to capital markets and extends credit to lower income countries, most notably in Africa in exchange for natural resources.
“Some MICs (middle-income countries) that have been borrowers from the (World Bank) are now getting positioned as lenders and donors to other lower income countries,” Senior Vice Finance Minister Kazuyoshi Akaba said in apparent reference to China. “We strongly urge them to act as responsible members of the international community by collaborating with other lenders and donors and respecting internationally agreed frameworks.
“Increased transparency of assistance on the part of the emerging donors is also important,” Akaba said during a one-day meeting in Singapore of the Development Committee, a joint development policy panel of the World Bank and International Monetary Fund.
Delegates said his remarks were apparently targeting China and the 24-member committee — chaired by Colombian Finance Minister Alberto Carrasquilla — shared the concern. World Bank President Paul Wolfowitz and IMF Managing Director Rodrigo de Rato were among other participants.
“It has been more than two decades since the current graduation policy has been put in place,” Akaba said. “I think it is meaningful to discuss a new policy under which graduation consultation is initiated sooner for countries with better market access.”
He said Japan has seen “some” developing countries with “stable access to capital markets and ample domestic savings,” alluding to China.
“These advanced MICs should seek to finance projects for poverty reduction and balanced growth primarily with resources they can acquire by themselves,” he said.
“In engaging MICs with stable market access and a means to satisfy their own financing need, the bank needs to bring their graduation in view and focus on nonlending services that supplement the recipient’s own efforts, while lending services, if necessary, should be directed exclusively to climate changes and other global public goods or to projects in a poverty area that would have a significant impact on poverty reduction.”
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