{"id":33408,"date":"2023-03-30T03:37:00","date_gmt":"2023-03-30T03:37:00","guid":{"rendered":"https:\/\/www.lifeandnews.com\/articles\/?p=33408"},"modified":"2023-03-31T03:44:14","modified_gmt":"2023-03-31T03:44:14","slug":"can-this-former-ceo-fix-the-world-bank-and-solve-the-worlds-climate-finance-and-debt-crises-as-the-institutions-next-president","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/can-this-former-ceo-fix-the-world-bank-and-solve-the-worlds-climate-finance-and-debt-crises-as-the-institutions-next-president\/","title":{"rendered":"Can this former CEO fix the World Bank and solve the world\u2019s climate finance and debt crises as the institution\u2019s next president?"},"content":{"rendered":"\n

Rachel Kyte<\/a>, Tufts University<\/a><\/em><\/p>\n\n\n\n

Over the past two years, a drumbeat of calls for reforming the World Bank has pushed its way onto the front pages of major newspapers and the agenda of heads of state.<\/p>\n\n\n\n

Many low- and middle-income countries \u2013 the population the World Bank is tasked with helping \u2013 are falling deeper into debt and facing growing costs as the impacts of climate change increase in severity. A chorus of critics accuse the World Bank of failing to evolve<\/a> to meet the crises<\/a>.<\/p>\n\n\n\n

The job of leading that reform is now almost certain to fall to Ajay Banga<\/a>, an Indian American businessman and former CEO of Mastercard who was nominated by President Joe Biden to replace resigning World Bank President David Malpass<\/a>. Nominations closed on March 29, 2023, with Banga the only candidate<\/a>.<\/p>\n\n\n\n

\"Ajay
Ajay Banga is a former Mastercard CEO, past chair of the International Chamber of Commerce and an American. The U.S. is the largest World Bank shareholder, and the institution\u2019s president has historically been American. Tony Karumba\/AFP via Getty Images<\/a><\/figcaption><\/figure>\n\n\n\n

There is no shortage of advice for what Banga and the World Bank need to do.<\/p>\n\n\n\n

The G-20<\/a> recently issued a report<\/a> urging the World Bank and the other multilateral development banks to loosen their lending restrictions to get more money flowing to countries in need. A commission led by economists Nicholas Stern and Vera Songwe<\/a> called for a rapid, sustained investment push that prioritizes transitioning to cleaner energy, achieving the U.N. sustainable development goals<\/a> and meeting the needs of increasingly vulnerable countries.<\/p>\n\n\n\n

African ministers of finance will soon come out with their own \u201cto do\u201d list for the World Bank, and India\u2019s minister of finance just pulled together an expert group<\/a> to consider World Bank reform.<\/p>\n\n\n\n

Banga will walk into the job with these and many other to-do lists. Yet he will inherit a corporate culture that makes the World Bank Group too inwardly focused<\/a> and too slow to respond<\/a>.<\/p>\n\n\n\n

I have worked for the World Bank Group<\/a> and with it from the outside. I see four key roles \u2013 four \u201cC\u2019s\u201d \u2013 that Banga will need to master from the outset. From his track record<\/a> and his reputation for deep thoughtfulness, I am confident that he can.<\/p>\n\n\n\n

1) Act as a CEO and get the entire World Bank Group house in order.<\/h2>\n\n\n\n

The World Bank Group is a conglomerate<\/a> with four balance sheets, three cultures and four executive boards, plus a dispute resolution arm.<\/p>\n\n\n\n

Lending to low- and middle-income countries is just part of its role. The World Bank Group also provides technical assistance<\/a> across all areas of economic development and invests in and provides risk insurance<\/a> to encourage companies to invest<\/a> in projects and places they might otherwise consider too risky. Its ability to mobilize private-sector finance and stretch every dollar is crucial for meeting the world\u2019s development and climate adaptation and mitigation needs. https:\/\/www.youtube.com\/embed\/gKpTL8KVy1Q?wmode=transparent&start=0 How the World Bank operates.<\/p>\n\n\n\n

Banga will need to set clear goals for each part of the World Bank Group and get them working more effectively to help the world achieve its goals.<\/p>\n\n\n\n

2) Assume the mantle of collaborator in chief to take on the debt and climate crises.<\/h2>\n\n\n\n

Many of the World Bank Group\u2019s client countries<\/a> are facing both mounting debt and rising costs from climate change.<\/p>\n\n\n\n

The high cost of borrowing<\/a> can hamper developing countries\u2019 ability to invest in needed infrastructure to grow and protect their economies, and they fear being locked out of global trade as the United States\u2019 green subsidies in the Inflation Reduction Act<\/a> and Europe\u2019s border carbon tax may make it more difficult for them to compete<\/a>.<\/p>\n\n\n\n

The solutions<\/a> to cascading problems like these cannot be managed by one institution. However, the current multilateral development bank system \u2013 the World Bank Group and the regional development banks<\/a> \u2013 is disjointed at best and competitive<\/a> at worst.<\/p>\n\n\n\n

\nhttps:\/\/datawrapper.dwcdn.net\/xbAni\/7\/\n<\/div><\/figure>\n\n\n\n

In the past, the leaders of the development banks, the International Monetary Fund and the World Trade Organization have cooperated, more or less, depending on crises and personalities, and can move fast when they need to.<\/p>\n\n\n\n

During the global financial crisis of 2008 and 2009, for example, the then-heads of the World Bank and the WTO hurried to develop trade finance facilities<\/a> to support banks in developing countries as capital fled to the U.S. and Europe. It took intense diplomacy to push wealthy countries and institutions to get money out the door to shore up businesses and trade<\/a>. Success was measured not in months but in days.<\/p>\n\n\n\n

The new president of the World Bank will need to support more radical collaboration among development financial institutions, including pooling capital and talent, to help respond quickly to countries\u2019 needs.<\/p>\n\n\n\n

It won\u2019t be easy. Institutional rivalries run deep. But with budgets tight<\/a>, there is growing clarity that there is no choice \u2013 the capital that is already in the system<\/a> is the closest at hand and can be deployed to better effect if the institutions are willing to adapt.<\/p>\n\n\n\n

3) Be a convener.<\/h2>\n\n\n\n

Overhauling how international finance works will require everyone to be on board \u2013 development banks, central banks, regulators, investment banks, pension funds, insurance companies and private equity.<\/p>\n\n\n\n

Banga and International Monetary Fund<\/a> Managing Director Kristalina Georgieva<\/a> can settle institutional differences and present a coordinated face to private investors and the major lending countries<\/a>, including China \u2013 which has emerged as the biggest holder<\/a> of developing country debt \u2013 to speed up support to struggling countries.<\/p>\n\n\n\n

On other issues, such as nature-based solutions to climate change<\/a>, building resilience and economic inclusion, the World Bank Group can bring its significant resources and skills, including data analysis, to global conversations that it has been painfully absent from for the past four years.<\/p>\n\n\n\n

4) Be a champion for the most vulnerable.<\/h2>\n\n\n\n

The world\u2019s most vulnerable people are the World Bank Group\u2019s ultimate beneficiaries. For those living on the front line of biodiversity loss and climate impacts, such as extreme heat, drought and flooding, the current international financial system is proving inadequate.<\/p>\n\n\n\n

The World Bank Group\u2019s management incentives are still too oriented to lending approved by the board, not the outcomes of that lending, advice and assistance.<\/p>\n\n\n\n

Throughout its history, World Bank leaders have been able to make rapid changes<\/a> to better help vulnerable countries when they stay close to the needs of their ultimate beneficiaries and the goals that the world has set.<\/p>\n\n\n\n

The next president faces turbulent times. Banga\u2019s careful listening on his campaign tour signals that he understands the complexity<\/a>. It\u2019s an extraordinary moment in the history of the institution<\/a>, with sky-high expectations of what one leader needs to do.<\/p>\n\n\n\n

This article was updated March 30, 2023, with the announcement that Banga is the only candidate for World Bank president.<\/em><\/p>\n\n\n\n

Rachel Kyte<\/a>, Dean of the Fletcher School, Tufts University<\/a><\/em><\/p>\n\n\n\n

This article is republished from The Conversation<\/a> under a Creative Commons license. Read the original article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Rachel Kyte, Tufts University Over the past two years, a drumbeat of calls for reforming the World Bank has pushed its way onto the front pages of major newspapers and the agenda of heads of state. Many low- and middle-income countries \u2013 the population the World Bank is tasked with helping \u2013 are falling deeper […]<\/p>\n","protected":false},"author":44,"featured_media":33409,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[277],"tags":[145,139,10832,13813,2662,2771,1230,13095,13811,2888,2501,13812,13810,9817,13814,13815,6702,2772],"_links":{"self":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/33408"}],"collection":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/comments?post=33408"}],"version-history":[{"count":1,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/33408\/revisions"}],"predecessor-version":[{"id":33410,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/33408\/revisions\/33410"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media\/33409"}],"wp:attachment":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media?parent=33408"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/categories?post=33408"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/tags?post=33408"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}