The head of the World Bank said on Tuesday that the global lender stands ready to help developing countries cope with a rise in interest rates as a result of the U.S. Federal Reserve’s plan to scale back its stimulus program.
“There’s a tremendous amount of concern about what could happen,” World Bank President Jim Yong Kim told reporters after a talk on the bank’s goal of reducing extreme poverty to 3 percent by 2030.
“We just have to be ready to move and try even harder to make sure that capital is available for the kinds of infrastructure investments developing countries need,” Kim said, noting that interest rates have already risen in some developing countries.
Borrowing costs for developing countries have become more expensive as interest rates rise in anticipation of less monetary stimulus from the Fed, which has been buying $85 billion per month in mortgage-backed securities and U.S. Treasuries as part of its quantitative easing program.
Much of the World Bank’s development plan hinges on helping developing countries obtain funds for critical infrastructure and energy projects that are necessary before private investment will flow into a country.
Kim said that developing nations have had difficulty attracting investment for infrastructure projects even when interest rates have been low.
Source: Reuters
