Banga vows to improve World Bank before asking for a capital increase

Ajay Banga promised to deliver a “better bank,” before asking shareholders for a “bigger bank,” the World Bank’s new president said during a press conference to kick off the annual meetings in Morocco. Banga stayed on message during his opening remarks on Tuesday, hammering home the same points he made during interviews leading up to the World Bank-International Monetary Fund gathering in Marrakech. His main points: • Livable planet: The bank has a new, expanded mission — eradicating poverty on a “livable planet” — which reflects the “intertwined and complicated” set of issues, including climate change, pandemics, food insecurity, and fragility facing the world, Banga said during a press conference. • CAF: The lender’s capital adequacy framework reforms could unlock an additional $150 billion in lending capacity over the next 10 years, but this is not enough. The multilateral development bank will use the newly established private sector investment lab to generate ideas on how to crowd in greater private investment for emerging markets. • Faster: Banga is reforming the institution to make it “better,” meaning faster and more efficient. It takes 27 months, on average, to get a project approved and another decade for implementation, he said. This is too slow because “development delayed is development denied,” he said. Banga also wants the bank to replicate and scale projects that work. • Partnerships: The president is figuring out ways the bank can “work better with other MDBs” to improve collaboration and standardize policies to reduce the burden for recipient countries. • No quick fixes: The changes “won’t be easy” but the aim is to engender long-term “deep cultural change” to make the bank relevant for the “next five decades,” he said. • African trade: Banga wants to improve intra-regional trade within Africa by improving the movement of goods; “I believe this topic deserves much more attention,” he said. • Impact: The bank needs to be more impact-focused. “I’m trying to move the bank from being evaluated on dollars and projects funded, to being evaluated on output or impact, meaning how many girls went to school … how many people got a better job,” he said. • Refinancing the World Bank: He’s “hopeful” that the United States’ proposed $1.25 billion financial package for the lender, which includes portfolio guarantees and support for the IDA Crisis Window, will be approved by Congress. • International Development Association worries: Banga has been “worrying” about the upcoming IDA replenishment, which needs to be the biggest ever, he said. • Capital increase: Banga will ask for a capital increase but only after he’s made some improvements. “Get capital adequacy going, make the place work quicker, faster, better with other partners, but then I’m definitely going to go back to our shareholders to seek a bigger bank, because I believe that is what the world needs for the next coming decades,” he said.