Kim Sees Job Cuts at World Bank in Effort to Lower SpendingAlaa Shahine and Sandrine Rastello
World Bank President Jim Yong Kim said he expects to cut jobs at the lender as he seeks to reduce costs.
“There are going to be staff reductions,” he said in an interview with Sara Eisen on Bloomberg Television in Washington today. “But we’re not going to do it on the base of any number. We’re going to look carefully at every part of the World Bank.”
After shaking up the Washington-based lender’s management and organizational structure, Kim is due to submit a strategy this week to its 188 member countries for meeting the goals of ending extreme poverty by 2030 and boosting incomes for the world’s poorest 40 percent.
The bank has about 15,000 employees, and distributed $53 billion in financial aid to emerging and developing economies in the last fiscal year.
Kim, appointed in July last year, said the possible job cuts would be the first attempt to examine the World Bank’s structure in 17 years.
Kim said in the interview the banks planned to cut “a minimum of $400 million a year out of the budget over the next three years.”
In a separate interview, Chief Financial Officer Bertrand Badre clarified that the goal is to reduce the bank’s annual costs to $4.6 billion after three years, compared with $5 billion now. That could affect spending on areas from travel to real estate, he said in a phone interview.
“As we do that, we’re going to look at every single position and say: Are the people doing this job really contributing to our mission of ending poverty,” Kim said.
The headcount will be lowered in part through attrition, Badre said.
Kim’s draft strategy suggests lowering costs to strengthen the lender’s finances and the transformation of the bank’s financial model to make it more sustainable, including a “right-sizing exercise” and more selective spending on grants. It also recommends the bank better recoup expenses when providing stand-alone services that aren’t attached to loans.
His comments come as the world’s finance chiefs gather in Washington for the annual meetings of the bank and the International Monetary Fund amid concerns over the U.S. debt ceiling and the Federal Reserve’s plan to scale back stimulus measures.
“I just want to make it clear to policy makers here in Washington, that whatever you do, please think about the impact that this is going to have in developing countries, for women in South Asia who are trying to grow rice, or young people in the Middle East,” Kim said.
He also urged emerging-market economies to carry out necessary “reforms” to reduce the effect of the possible reduction in U.S. stimulus by the Federal Reserve. In a press conference earlier, he said countries have a “two or three months’ window” to implement those.
An increase in interest rates for emerging markets after the Fed first announced plans to cut back its bond purchases revealed “all the weaknesses in the emerging-market economies,” he said. “The message we’ve been sending to the emerging markets is: now is the time to undertake the reforms you’ve been promising.”