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World bank president Ajay Banga outlines move to make World Bank ‘better, bigger’, calls for more capital from shareholders – Times of India
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MARRAKECH: World Bank President Ajay Banga on Wednesday outlined a series of steps that the multilateral agency has initiated to make it “better” and more focused on “output”, instead of just the scale of financing, and underlined the need for shareholders to expand the capital base to make it “bigger”.
At a press conference, Banga — who took over 130 days ago and insisted on being referred to by his first name and making public his “allergy” to being called president — said the measures would result in allowing the World Bank to provide additional support of around $150 billion over 10 years.
“A lot of work has gone into capital adequacy. Loan-to-equity ratio has been moved to generate additional lending of $40 billion over 10 years… Hybrid capital and portfolio guarantees can be used to put money without putting capital and can be leveraged six-eight times…. A lot of work on special drawing rights (SDR) has been done … we can get to $150 billion of lending capacity over 10 years, which means 15-20% greater capacity (to lend)… It is big but not enough,” said the India-born World Bank chief.
A key part of the strategy to get the World Bank ready to meet the challenges for “the next 30-40 years” is to have greater private sector linkages, and de-risk those investments. “Even partnership with the private sector will require us to have a bigger balance sheet. The Independent Expert Group has put out its own thinking, which has not been accepted by G20… will go back to shareholders to seek a bigger bank,” Banga said. Already, the US has sought Congress approval for more capital with some steps underway in Germany and the UK, but the other countries are yet to move on it.
As part of a revamp, the World Bank will seek the nod of shareholders to expand its mandate to include combating climate change and dealing with other public goods in addition to retaining its focus on reducing poverty, for which more resources are sought to be provided. Several steps are being taken internally to improve the overall functioning.
Following client feedback of the World Bank Group, comprising private sector lending arm IFC and other agencies such as those offering guarantees, “working in silos”, Banga a critical part of the revamp plan is to offer a complete solution to countries. “The idea is to work better, which is being more efficient. It takes 27 months from discussing to approving (a proposal) and a decade to implement (it). If we can cut that… development delayed is development denied,” he said.
Similarly, he said that multilateral agencies will work together so that it is easier for countries to tap funding instead of repeating the exercise separately with three-four of them. Besides, the World Bank chief said that the idea is to be faster in deciding on lending and packages.
At a press conference, Banga — who took over 130 days ago and insisted on being referred to by his first name and making public his “allergy” to being called president — said the measures would result in allowing the World Bank to provide additional support of around $150 billion over 10 years.
“A lot of work has gone into capital adequacy. Loan-to-equity ratio has been moved to generate additional lending of $40 billion over 10 years… Hybrid capital and portfolio guarantees can be used to put money without putting capital and can be leveraged six-eight times…. A lot of work on special drawing rights (SDR) has been done … we can get to $150 billion of lending capacity over 10 years, which means 15-20% greater capacity (to lend)… It is big but not enough,” said the India-born World Bank chief.
A key part of the strategy to get the World Bank ready to meet the challenges for “the next 30-40 years” is to have greater private sector linkages, and de-risk those investments. “Even partnership with the private sector will require us to have a bigger balance sheet. The Independent Expert Group has put out its own thinking, which has not been accepted by G20… will go back to shareholders to seek a bigger bank,” Banga said. Already, the US has sought Congress approval for more capital with some steps underway in Germany and the UK, but the other countries are yet to move on it.
As part of a revamp, the World Bank will seek the nod of shareholders to expand its mandate to include combating climate change and dealing with other public goods in addition to retaining its focus on reducing poverty, for which more resources are sought to be provided. Several steps are being taken internally to improve the overall functioning.
Following client feedback of the World Bank Group, comprising private sector lending arm IFC and other agencies such as those offering guarantees, “working in silos”, Banga a critical part of the revamp plan is to offer a complete solution to countries. “The idea is to work better, which is being more efficient. It takes 27 months from discussing to approving (a proposal) and a decade to implement (it). If we can cut that… development delayed is development denied,” he said.
Similarly, he said that multilateral agencies will work together so that it is easier for countries to tap funding instead of repeating the exercise separately with three-four of them. Besides, the World Bank chief said that the idea is to be faster in deciding on lending and packages.
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