World Bank President David Malpass on Wednesday criticized Microsoft's $68.7 billion deal to buy Activision Blizzard, saying it was a questionable allocation of capital at a time when poor countries were struggling to restructure their debt, fight the pandemic and impoverish them. Malpass said at an online event at the Peterson Institute for International Economics that poor countries need more capital inflows, but that unusually loose monetary policies in developed countries have interrupted those inflows.
He said he was struck by the scale of Microsoft's acquisition of Activision Blizzard, dwarfing the $23.5 billion that rich countries agreed to donate to the International Development Association, the World Bank's fund for poor countries, last December.
Malpass said: "You can't help but think, wait a minute, is this the best allocation of capital? The money will flow to the bond market. You know, a lot of [capital] is flowing into the bond market. ”
He added that only a small percentage of developing countries have access to such bond financing, while too much capital remains tightly sealed in developed countries, especially central bank reserve assets used to support long-term bond purchases.
His remarks echoed a similar call last week that central banks should cut their long-term bond holdings to free up lending capital.
"This will lead to a situation where a lot of capital is allocated to already capital-intensive parts of the world, that is, advanced economies, for example, to build more on infrastructure and real estate that is already massively built," Malpass said. ”
"At the same time, a more normal return on global investment is needed to bring more financing capacity to small businesses in developing countries," he said. ”
"In order to address the problems of refugee flows, malnutrition, etc., more money and economic growth must flow into developing countries," Malpass said. ”