President World Bank (World Bank) David Malpass criticized Microsoft (MSFT.O) related acquisitions game Activision Blizzard (ATVI.O) valued at US$69 billion (equivalent to Rp.991 trillion). This is because, at the same time, poor countries are still struggling to restructure debt and combat poverty covid-19 as well as poverty.
Reported from Reuters, Thursday (20/1), Malpass said more capital needed to flow to poor countries, but this flow was disrupted by unusually easy monetary policies in developed countries.
“We have to wonder: ‘Wait a minute, is this the best capital allocation?’ It’s going into the bond market, a huge amount of (capital) is flowing into the bond market,” Malpass said of the Microsoft deal at a virtual Peterson Institute for International Economics event.
He admitted that he was surprised when he saw the size of the Microsoft acquisition deal for the “Call of Duty” maker Activision Blizzard, which was US $ 69 billion.
This amount far dwarfs the US$23.5 billion (equivalent to Rp.337 trillion) in donations agreed in December by wealthier donor countries to the International Development Association, the World Bank’s fund for the poorest countries, with each receiving about US$ $8 billion (equivalent to Rp. 114 trillion) per year for three years.
A small number of developing countries have access to bond financing while too much capital remains held in developed countries, especially in central bank reserve assets used to support long-term bond purchases.
Malpass’s comments echo similar calls last week for the central bank to cut holdings of long-term bonds to free up borrowed capital.
“That brings us into a situation where a large amount of capital is allocated to the already capital-intensive parts of the world from developed economies that continue to build more and more of their existing infrastructure and real estate,” Malpass said.
Meanwhile, Malpass feels there is a need for more equitable global investment to be needed to bring more small business financing capacity in developing countries.
“To deal with the refugee flows, the ongoing malnutrition and so on, there has to be more money and growth flowing into developing countries,” he added.
A Microsoft spokesperson did not immediately respond to a Reuters request for comment on Malpass’s statement.
(tdh/sfr)
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