In an unprecedented situation, the African Development Bank (AfDB) has reacted with dismay at public criticism directed at it from the World Bank President David Malpass.
On Monday, Malpass launched a rare attack on the AfDB’s lending to African governments. Malpass said at a World Bank-International Monetary Fund debt forum in Washington that the Asian Development Bank, the African Development Bank, and the European Bank for Reconstruction and Development were contributing to debt problems.
“We have a situation where other international financial institutions and to some extent development finance institutions as a whole, certainly the official export credit agencies, have a tendency to lend too quickly and to add to the debt problem of the countries,” Malpass said, according to Reuters news agency.
This Thursday evening, the AfDB, based in Ivory Coast issued a statement dismissing Malpass’ comments.
Malpass “statement is inaccurate and not fact based,” said the AfDB. “It impugns the integrity of the African Development Bank, undermines our governance systems, and incorrectly insinuates that we operate under different standards from the World Bank. The very notion goes against the spirit of multilateralism and our collaborative work.”
The AfDB says it is actually the World Bank that has pushed African countries into more debt as it has pumped more than double the AfDB portfolio.
“The World Bank’s operations approved for Africa in the 2018 fiscal year amounted to US $20.2 billion, compared to US $10.1 billion by the African Development Bank,” says the AfDB in response.
World Bank chief Malpass said there needed to be more coordination among international financial institutions to coordinate lending and maintain high standards of transparency.
“And so we have a very real problem of the IFIs themselves adding to the debt burden and, and there’s pressure then I think on the IMF to sort through it and look at the best interest for the country,” he said.
With reference to the countries described as “heavily indebted,” the AfDB says, “our Bank recognizes and closely monitors the upward debt trend. However, there is no systemic risk of debt distress.”
It adds: “We are of the view that the World Bank could have explored other available platforms to discuss debt concerns among Multilateral Development Banks. The general statement by the President of the World Bank Group insinuating that the African Development Bank contributes to Africa’s debt problem and that it has lower standards of lending is simply put: misleading and inaccurate.”
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