I also hope that the Bank can move away from what I once called its “convoy approach” – all sectors in all countries – toward an emphasis on what is most important. Recognition that provision of large amounts of funding at moments of crisis comes with maximum speed can be of enormous value to client countries.
Fourth, these steps should be reflected in a major green capital increase to be agreed within a year. Given how dire the world’s needs are, the increase should be 2-3 times as large as the previous $13 billion increase in 2018. I would estimate that a $30 billion dollar increase in paid-in capital, which would cost the US about $5 billion over eight years, could support nearly an extra $100 billion in annual lending, heavily directed toward the energy transition.
This is more the beginning of a vision than a detailed program. My goal is to convey a sense of the urgency and scale the moment demands. I have not been in office for quite a while, so I have lost sympathy with the constraints that the staff of the Bank and the world’s treasuries will point to. Guilty. On the other hand, there are hinge moments in history when the transition from inconceivable to inevitable is dizzyingly rapid.
This must be the case. After all that has happened in the last few years, there is an urgent need for the US and its allies to regain the trust of the developing world. There is no better means of regaining trust than through the collective provision of large-scale support for countries’ highest priorities. And there is no more rapid and effective way of mobilizing support than through the World Bank. If we do not see major progress on these issues at the G20 Finance Ministers and Central Bank Governor meeting this week in Washington, DC, a major opportunity will have been squandered.
Lawrence H. Summers was chief economist of the World Bank (1991-93), U.S. secretary of the Treasury (1999-2001), Director of the U.S. National Economic Council (2009-10), and president of Harvard University (2001-06), where he is currently university professor.