China Boosts World Bank Aid for Poorest in Bid for More Clout

China boosted its contribution to the World Bank’s fund for the poorest nations in the latest sign of the country’s efforts to gain influence at international financial institutions.

The country almost doubled its grant to the International Development Association, the unit that makes low-interest loans and grants to the most impoverished countries, to about $300 million, a report published today showed. Part of it will be used to support an additional low-interest, $1 billion loan to the unit, a mechanism allowed for the first time by the bank as it sought contributions from emerging-market countries.

“While they’re certainly not contributing on the scale of the large IDA donors, it’s nonetheless a large increase for them,” said Scott Morris, a former deputy assistant secretary for development finance and debt at the U.S. Treasury Department.

The commitments “demonstrate a desire to be viewed not just as a major borrower of the World Bank but as a major shareholder in the institution,” said Morris, now a visiting policy fellow at the Center for Global Development, an aid research group in Washington.

China in recent years has been gaining clout at the bank and at the International Monetary Fund, with higher voting rights and several high-ranking jobs for Chinese nationals. Since 2009, it’s twice made contributions to boost the IMF emergency lending pool, including one time when the U.S. abstained.

The IDA fund, which is replenished every three years, got $52 billion from donor nations and other sources in December. To attract funds at a time when countries from France to the U.S. rein in spending, the Washington-based bank allowed nations to make part of their contributions through concessional loans instead of just grants. Details of contributions were released today.

In the previous replenishment, China’s had contributed a total $161 million to IDA, according to the bank.

To contact the reporter on this story: Sandrine Rastello in Washington at srastello@bloomberg.net

To contact the editors responsible for this story: Chris Wellisz at cwellisz@bloomberg.net Brendan Murray, James L Tyson

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