World Bank, IMF will work with new lender

Leaders of the World Bank and International Monetary Fund said on Thursday that their institutions are ready to cooperate with China and the Asian Infrastructure Investment Bank.

"Our expectation is that we will continue to have a very close relationship and we will work with China to tackle the most complex and difficult issues," said World Bank President Jim Yong Kim at a news conference to mark the World Bank/IMF Spring Meetings 2015 running from Friday to Sunday in Washington.

"I first of all want to congratulate China for taking such a bold step in the direction of multilateralism," Kim said.

Kim said that in recent years, cooperation between China and the World Bank "has only gotten stronger". The bank has been in close contact with Chinese officials since the launch of the AIIB.

"I suspect that in the early period, we'll play a much larger role in project preparation because we have much more technical expertise than the AIIB has right now," Kim said. "But there's no reason why we would not do a lot of the project preparation, for example, through our global infrastructure facility, and then the AIIB could be a co-investor."

The World Bank is waiting for the point at which there are articles of agreement or a constitution for the AIIB framing specific areas in which the AIIB will invest, to continue the conversation, Kim said.

The AIIB's prospective founders' list has increased to 57. The latest founding members are Sweden, Israel, South Africa, Azerbaijan, Iceland, Portugal and Poland, according to the Ministry of Finance.

The IMF also said that it is prepared to cooperate with the AIIB. The new bank "is a most welcome institution and one with which the IMF certainly is planning to cooperate", said Christine Lagarde, managing director of the IMF.

"The proposal to have a completely dedicated institution (the AIIB) that will focus on infrastructure on a regional basis is actually an attractive proposition, and it's not that the region is short of needs - it's short of potential projects," she said.

Lagarde signaled her support for the AIIB at the Atlantic Council on April 9 when she said that cooperation with the AIIB "is a no-brainer".

The World Bank highlighted the importance of undertaking "comprehensive structural reform programs" in developing countries to promote growth, in line with the IMF World Economic Outlook April 2015, released on Tuesday.

Kim dismissed concerns that the shadow banking sector in China presents a high risk, saying that "our own sense going forward is that the Chinese authorities are very well-equipped to deal with whatever might happen, and we don't think that the risk of a disorderly unwinding or a disorderly event related to the current sub-national indebtedness (in China) or the shadow banks is a high possibility".

Asked about the inclusion of the yuan in the IMF's currency basket for special drawing rights, an international reserve asset, Lagarde said that the yuan is on the way to meeting the IMF criteria by speeding up the opening of the capital account and deepening financial markets.

"The Chinese authorities know quite well what is desirable, what needs to be changed and improved in the monetary policy and in the financial sector in China," Lagarde said.

Liu Xiaoxian in Washington contributed to this story.