The World Bank reflects our ambition

Ajay Banga July 18, 2023 09:06

World leaders are all too familiar with the global community’s challenges – loss of progress in our fight against poverty, an existential climate crisis, a fledgling pandemic recovery, and a crippling war on the borders of Europe. But beneath the surface, a deep mistrust is quietly pulling the Global North and South apart at a time when we need to be uniting if we are to have any hope of overcoming these intertwined crises.

The Global South’s frustration is understandable. In many ways, these countries are paying the price for the prosperity of others. When they should be ascendant, they’re concerned promised resources will be diverted to Ukraine’s reconstruction; they feel their aspirations are being constrained because energy rules aren’t applied universally, and they’re worried a burgeoning generation will be locked into a prison of poverty.

But the truth is that we cannot endure another period of emission-intensive growth. We must find a way to finance a different world, one where climate resilience is strong, pandemics are manageable, food is abundant, and fragility and poverty are defeated.

Our challenges don’t respect lines on a map and won’t be adequately addressed piecemeal. They are affecting us all – but we’re feeling the effects differently. In the Global North, climate change means emissions reductions, but in the Global South, it is a matter of survival, because hurricanes are stronger, heat-resistant seeds are in short supply, drought is destroying farms and towns, and floods are washing away decades of progress.

In the middle is the World Bank. While questioning its relevance, the world is looking to the 78-year-old institution to deliver solutions at scale. To do that, the Bank must adopt a new vision and mission that is worthy of our shared aspirations. In my view, the vision for the World Bank is simple: to create a world free of poverty on a livable planet.

But that vision is threatened by these intertwined crises – and we are in a race against time. This urgency motivates us to write a new playbook that will drive meaningful development, leading to better quality of life and jobs for people.

Our playbook must reach everyone, including women and young people, and the development it underpins must be resilient to shocks, such as those related to climate change, biodiversity loss, pandemics, and conflict and fragility. It also must be sustainable, delivering steady economic growth and job creation, gains in health and education, credible fiscal and debt management, food security, and access to clean air, and water, and affordable energy.

Anyone who has studied the World Bank, as I have, knows that it is worthy of admiration, having emerged from conflict to channel countries’ energies from warfare to the pursuit of peace. But history and legacy cannot help us now, our legitimacy must be earned daily through the impact the Bank has.

Next week, a diverse set of leaders from the world’s 20 largest economies will gather in India for the G20 Finance Ministers and Central Bank Governors Meeting. Among the items on the agenda will be the reform of all multilateral development banks under the umbrella of what we call the Evolution Roadmap.

Implementing the roadmap can’t be business as usual; urgency, purpose, and a warlike effort are required. The World Bank is embracing this period of change.

Already, we are working to identify new efficiencies that will allow us to do more in less time – incentivizing output, not input, and ensuring our focus is not limited to money out the door but how many girls are in school, how many jobs are created, how many tons of carbon dioxide emissions are avoided, and how many private-sector dollars are mobilized.

We have developed a work plan to stretch every dollar, while preserving our AAA credit rating. We are digging deep to boost our lending capacity, finding ways to leverage callable capital, and creating new mechanisms like hybrid capital that could unlock untold resources to deliver results. We are seeking to expand and evolve concessional financing so it can help more low-income countries achieve development goals, while thinking creatively about uses that will incentivize cooperation across borders and tackle shared challenges.

But nearly all estimates make clear adequate progress requires trillions of dollars annually. So, we are opening our doors to private-sector partners, working in tandem to support the meaningful, sustainable progress that has eluded us so far.

Mobilizing the resources needed to generate growth and jobs, which we know is the single best way to drive down poverty, is hard work that will test our shared sincerity and capacity. Fortunately, our institution is designed to take on difficult challenges. But, while we are committed to building a better Bank, in time we will need a bigger Bank.

The World Bank is merely an instrument that ultimately reflects the ambition of those on whose generosity it relies, and the progress we aspire to achieve comes at a cost. But if there is wisdom in our origins, it is that monumental challenges require a unified, and scaled, response.

Development delayed is development denied, which is why we must overcome the effects of inefficient multilateralism, geopolitical competition, and the mistrust that has become widespread across the Global South. The World Bank must be a refuge from these forces, a sanctuary for cooperation, collaboration, and creativity. If we can build that Bank, we can do big things together. We can eradicate poverty on a livable planet.

Copyright: Project Syndicate

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Ajay Banga

President of the World Bank Group