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  • Dec 27, 2014
  • Updated: 5:23am

September meeting to produce landmark deal

PUBLISHED : Thursday, 01 May, 1997, 12:00am
UPDATED : Thursday, 01 May, 1997, 12:00am
 

The World Bank aims to produce a landmark deal when it holds its annual meetings in Hong Kong in September, which will see much more private sector involvement in infrastructure projects.


Developing countries, including China, still suffer low rates of private investment in infrastructure because companies often feel that the risks involved in such investments are too high.


In comments concluding the World Bank and International Monetary Fund's spring meetings, bank president James Wolfensohn called for a greater discussion about the bank's falling net income.


'I have absolutely no concern at all about the financial stability or the strength of the bank, but I have concerns about the constant demand for income,' Mr Wolfensohn said.


He said bank member countries appeared to think it should pay for everybody's ideas, as all members had a claim on the bank's income.


'I just wanted to draw the attention of the board that the bank is not some miracle organisation that continues to produce profits regardless of what it does, and in fact there are some factors in the way in which we charge for loans that have led to a decline in income,' Mr Wolfensohn said.


The bank now made very little money in lending, he said, and he wanted to bring this to the attention of member countries.


Objectives for the Hong Kong annual meetings also include a more defined approach to encouraging private investment into developing country infrastructure, where about US$200 billion a year of investment is required over the next 10 years.


'We presented a multi-stage approach which we will articulate more completely in Hong Kong,' Mr Wolfensohn said.


The bank believes that to start with, developing countries must present a much clearer regulatory environment and have an established framework for determining the extent of private sector involvement.


Mr Wolfensohn confirmed that creating a system to encourage more private sector investment would also mean talking to other development institutions. Interested parties, including the Asia-Pacific Economic Co-operation forum, had also made a commitment to study this area.


A key component of such investment has also been the bank's Multilateral Investment Guarantee Agency, which aims to promote foreign direct investment in developing countries by providing guarantees.


It is in dire need of additional capital, and after failing to find a solution at the spring meetings, the bank is hoping an answer can be found in Hong Kong.


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