Incoming World Bank President Jim Yong Kim said Monday that the agency was poised to boost lending to poorer countries if the world economy worsens and that he would consider sending teams of experts to Greece if the government of that struggling country requested help.
The possibility that the World Bank might dispatch poverty-fighting and development experts to the euro-zone country highlights how dire Greece’s situation has become — and how worried agency officials are about the threat that Europe’s debt problem poses to poor and middle-income countries.
The euro-zone crisis had become a preoccupation of former World Bank president Robert Zoellick, who frequently called on European leaders to take more effective steps to address what he regarded as a global risk.
Kim said deteriorating conditions would likely harm neighboring countries in Eastern Europe that rely on euro-zone investment and trade and could also threaten Chinese manufacturers, Brazilian farmers and U.S. banks, among others.
“We are monitoring the situation very carefully. The primary mission of the World Bank in this crisis is to make sure that low- and middle-income countries are protected . . . to ensure that global growth continues,” said Kim, whose first day at the World Bank was Monday. “We are ready to respond.”
After the global financial crisis spiked in 2008, the World Bank boosted its lending to record levels, supporting projects to back weakened banks in Eastern Europe and help poorer countries cope with increases in food prices and a lack of access to trade finance.
In response to a question during a meeting with reporters, Kim said he would be prepared to offer Greece and other European countries technical assistance, helping sort out the euro zone’s economic troubles through lessons his staff has learned working with developing countries.
“Where we feel we can add value is in technical support around some of the structural issues,” he said.
This wouldn’t be the first time that the World Bank provided help to countries that are not eligible to borrow from it because they are too rich. In Europe, countries like Slovakia and Latvia have “graduated” from World Bank borrowing but still get technical assistance. Oil exporters in the Persian Gulf have also relied on such help.
Kim, a former president of Dartmouth College, takes over at the World Bank at a time when demand for its loans has been declining. During the search for Zoellick’s successor, some outside analysts suggested the bank’s importance had less to do with its traditional financing role and more to do with the expertise it has gained in overseeing projects, developing markets and improving how countries are governed.
Kim, a doctor by training who has experience in health programs, said he agreed that the bank’s money was becoming less important.
“There are so many sources of capital in the world these days that often that is not going to be our role,” said Kim, noting that his experience running a major university prepared him to manage an organization that he regards as “a huge academic institution. . . . There is a tremendous amount of research and analytic firepower.”
Kim was nominated for the post by President Obama. By tradition, the United States, the bank’s largest shareholder, has named its president. Nominees from Nigeria and Colombia also vied for the post, but Kim was overwhelmingly selected by the World Bank board.
With no formal background in finance or economics — his predecessors have all hailed from top banking, corporate or government posts — Kim relied heavily in his transition on a team of advisers from the U.S. Treasury. One, Navtej Dhillon, an adviser to Undersecretary of the Treasury for International Affairs Lael Brainard, is joining Kim’s top staff. Dhillon also worked at the World Bank with former president James Wolfensohn.