A scene from the 2018 World Bank Annual Meetings in Bali, Indonesia. Photo: Franz Mahr / World Bank / CC BY-NC-ND

NUSA DUA, Indonesia — Thousands of delegates and development professionals are on their way back home after a week of discussions about the future of human capital, climate change, infrastructure, and finance at the World Bank Annual Meetings in Bali, Indonesia.

While these meetings lacked the late-hour drama that accompanied World Bank President Jim Yong Kim’s effort to secure a capital increase for the bank during the Spring Meetings in April, they nonetheless bore witness to some significant moments that will have implications for how the world’s largest multilateral development institution positions itself amid the world’s most pressing challenges.

The shadow of a devastating earthquake and tsunami on Sulawesi loomed over the official sessions, civil society panels, and interviews on the sidelines of this global gathering — as did a dire new United Nations climate change report. Bank leaders found themselves pressed to explain how the institution can play a transformational role in driving the right kinds of investment at a moment when there is very little time to waste.

At the same time, geopolitical and economic tensions have complicated the World Bank’s position, as it seeks to stake out a constructive and unifying place among global powers that appear bent on competition and confrontation.

Every three years, the bank’s annual meetings escape Washington, D.C., to a member country’s backyard. In 2021, Morocco will take up the charge, the bank announced on Sunday. By then, we will know even more about the pace of the world’s energy transition, the state of human capital development, the successes and failures of China’s massive infrastructure push, the evolution of the World Bank’s governance structures, and the balance of public and private financing.

Here is what we learned this week.

Climate change

The annual meetings kicked off with some news on the climate change front. In an op-ed for Devex, International Finance Corporation CEO Philippe Le Houérou announced a “greening finance” policy at his institution. Le Houérou’s plan is to work proactively with financial institutions that have coal investments on their books to steer them in a more climate-friendly direction.

Two days later, World Bank President Kim announced that the bank will not move forward with support for a controversial coal plant in Kosovo. In addition to its coal pledges, the World Bank — along with Germany and the United Kingdom — launched a $145 million Global Risk Financing Facility aimed at helping countries to build disaster risk insurance systems for more immediate and reliable resource mobilization.

While these announcements were welcomed by civil society groups, they also begged questions about what else the bank can do to accelerate a global transformation away from high-carbon energy. These individual announcements still fall under the shadow of last week’s Intergovernmental Panel on Climate Change report, which found that the world must cut carbon emissions 45 percent by 2030 in order to stave off extremely damaging warming.

It is not enough for the World Bank just to avoid coal projects, but it must be at the forefront of offering countries viable alternatives, climate experts told Devex.

The bank’s climate leaders say they are setting new targets for climate action — after already meeting the previous targets. The bank is using its limited financial resources to have an outsized impact in areas such as battery storage, floating and rooftop solar systems, and helping countries adapt to impacts of climate change that appear increasingly significant and inevitable.

China and debt sustainability

As concerns about debt sustainability in developing countries mount, China’s massive infrastructure finance effort, the Belt and Road Initiative, is under increasing scrutiny. The initiative holds enormous potential to help fill an infrastructure gap that inhibits trade and transport in dozens of countries. It also holds significant — though less well understood — risks.

The World Bank, which has signed on as a partner to the Belt and Road Initiative, is currently undertaking a study to better understand where those risks and opportunities lie so that the latter might be maximized while guarding against the former. The results of that study should be released in the spring, said Caroline Freund, the bank’s director of trade, regional integration and investment climate, during a highly anticipated session on the Belt and Road Initiative on Saturday.

While the World Bank team acknowledges that BRI carries risks — including potential debt problems in some countries as well as environmental and social harm — their preliminary conclusions suggest that the bank does not yet consider these to be above and beyond the concerns that would be associated with any major infrastructure project.

“These are the concerns that would come in any such project, and there’s a big opportunity for growth,” Freund said.

That position has some wondering whether the bank, as both a partner to BRI but also a standard-bearer for development finance safeguards, is asking tough questions of its Chinese counterparts.

“They’re doing some very good detailed data work, which will ultimately be helpful to the Chinese and to the countries that are participating. At a higher level, their overarching framing of it leans toward being too friendly to the initiative and isn’t playing the role of constructive critic as much as I would like them to be,” said Scott Morris, senior fellow at the Center for Global Development.

Human capital

The World Bank’s human capital index, launched last Thursday, was the centerpiece of the meetings and described by the bank’s CEO Kristalina Georgieva as “maybe the most significant mark the meetings in Bali would leave in development history.”  

The index ranks 157 countries according to their performance against a set of four health and education indicators according to a formula that estimates the amount of economic productivity lost as a result of poor human capital outcomes. It is hoped that by quantifying the benefits of social sector investments, the index will inspire governments, especially those in Africa ranked bottom of the index, to put more funding into health and education, and rise up the league table.

Fears over the changing jobs market in the wake of technological advancements added an extra sense of urgency to the human capital agenda. So much so that the changing nature of work was the focus of the bank’s flagship World Development Report, released last week to criticism from civil society.  

NGOs were broadly supportive of the human capital index, however, and welcomed the bank’s endorsement of the value of social projects where in the past the institution, and IMF, have pushed borrower countries to cut public spending. The initiative also received praise for its focus on outcomes instead of inputs — one of the indicators looks at expected learning‐adjusted years of school.

Via Twitter

However, some have expressed fears that the HCI risks commoditizing people by valuing the benefits of their education and health in terms of the potential economic contribution it brings.

Some countries appeared to welcome the index; one executive director told Devex they were struck by how many finance ministers “were talking about education and health in a way I hadn’t heard before.”

However, not all were thrilled. India publicly rejected the score, after coming 115th, and described the HCI as having been “hastily” put together. Similarly, representatives of the G-24 group of developing countries also questioned the robustness of the methodology in a press conference on Thursday. World Bank President Kim defended the methodology to a small group of reporters the day before the launch, but conceded the methodology would be refined in future iterations.


The World Bank-IMF Development Committee — around which the meetings are based — met on Saturday. The subsequent communique confirmed things were on track regarding the capital increase package agreed at the Spring Meetings. Under the terms of the deal, the World Bank and IFC agreed to a set of reforms, progress on which the committee said it would expect an update at the next meetings, to be held in Washington, D.C., in April.  

A key reform was a commitment to work more in fragile and conflict states which brings with it new challenges and risks. Ahead of the committee meeting, United States Treasury Secretary Steven Mnuchin released a statement saying the bank’s accountability mechanisms need to be reformed “to provide adequate redress, especially for vulnerable communities.”  

The bank’s board has already commissioned a review of the Inspection Panel — the bank’s independent complaints mechanism — completed earlier this year. The executive board will meet later this month to decide on specific reforms.  

The move comes as the U.S. Supreme Court is set to decide whether international organizations such as the World Bank Group have “absolute immunity” from lawsuits. The court’s decision, due on Oct. 31, comes after a group of Indian fisherman decided to sue IFC for its support of the Mundra Power Plant, which they say has contaminated groundwater, killed marine life, and ejected coal ash into the air. IFC argues U.S. law makes the international organization immune from liability. In August, the U.S. Department of State issued a brief challenging that immunity, which was welcomed by campaign groups.

Private finance

The role of the private sector in transforming development finance from “billions to trillions” was a major theme at this year’s annual meetings. Impact investing was presented as one way of helping crowd in private sector finance through the launch of a draft set of guiding principles, led by IFC. The nine draft principles aim to help tap the estimated $228 billion impact investing market, while avoiding what IFC's Le Houérou described as “impact washing.”

Blended finance was also the subject of much discussion, including during a two-day conference — Tri Hita Karana Forum on Sustainable Development  — held alongside the meetings. The Organisation for Economic Co-operation and Development released a roadmap on how blended finance can help mobilize private financing for the Sustainable Development Goals during the forum.

Still, not everyone in Bali is as optimistic about the prospects that innovative financing, including impact investing, can fill the yawning development financing gap.

Via Twitter

Update, Oct. 15, 2018: This article has been updated to clarify that the World Bank is currently undertaking a study of the Belt and Road Initiative to better understand where risks and opportunities lie so that the latter might be maximized while guarding against the former.

Catch up on what happened at the World Bank Annual Meetings in Indonesia, where Devex reporters Michael Igoe and Sophie Edwards were on the ground.

About the authors

  • Sophie Edwards

    Sophie Edwards is a Reporter for Devex based in London covering global development news including global education, water and sanitation, innovative financing, the environment along with other topics. She has previously worked for NGOs, the World Bank and spent a number of years as a journalist for a regional newspaper in the U.K. She has an MA from the Institute of Development Studies and a BA from Cambridge University.
  • Michael Igoe

    Michael Igoe is a Senior Reporter with Devex, based in Washington, D.C. He covers U.S. foreign aid, global health, climate change, and development finance. Prior to joining Devex, Michael researched water management and climate change adaptation in post-Soviet Central Asia, where he also wrote for EurasiaNet. Michael earned his bachelor's degree from Bowdoin College, where he majored in Russian, and his master’s degree from the University of Montana, where he studied international conservation and development.