Devex Invested: What’s on the menu in Marrakech

Ajay Banga started his term as World Bank president this year by traveling the globe listening to countries’ needs. Now, with the bank’s evolution road map up for discussion at this week’s annual meetings of the bank and the International Monetary Fund in Marrakech, Morocco, it’s time to act. A G20 report in July set out the challenge to more than triple the current pace of lending, but shareholders have different views on how to get there. Greater use of loan guarantees and hybrid capital are among the moves likely to be discussed at the meetings, with Reuters reporting that the U.S. Treasury is working on new rules on callable capital with an eye to reaching decisions in April 2024. We will be following the latest recommendations of the G20 independent expert group coming out on Friday. The World Bank has a “new playbook,” which sees it becoming more open, creative, faster and easier to work with, while also offering countries a new set of financial “tools.” This was laid out by Anna Bjerde, the World Bank’s managing director of operations, at a panel event in Marrakech earlier today. The change is needed in the face of growing instability, shocks, and other “intertwined challenges,” to use one of Banga’s favorite phrases. In response, the bank must have a “whole different mindset,” Bjerde said. As for Banga, Devex contributor Sophie Edwards has this detailed look at what the former Mastercard CEO has done so far at the bank, and whether he can live up to expectations. The bottom line? A decent start, but with much further to go — and faster — to meet the challenge he’s set for himself of fighting poverty “on a livable planet.” Amy Dodd, policy director of development economics at ONE Campaign, tells Sophie that, “If we are talking about reforming the World Bank as a central part of how we finance the huge climate change and development needs then we aren’t seeing concrete action at the scale and urgent pace we need to.” And as Charles Kenny, a senior fellow at the Center for Global Development, puts it: “Banga has been set up with great expectations by shareholders but he’s not being given the tools to deliver. … It’s about time he stepped out from behind the coattails of the people who appointed him and demands more money.” Our own Managing Editor Anna Gawel is on the ground in Marrakech. Contact her here for any news tips or opinions. Read: An early progress report on the World Bank president + Catch up on our coverage and analysis of the World Bank annual meetings. All aboard It is no secret that low-income countries fear that amid Banga’s focus on climate change, bank resources could go toward middle-income countries to mitigate their greenhouse gas emissions, while low-income countries that barely contribute to emissions — but disproportionately feel the effects of them — will get shortchanged. “It's definitely been a delicate compromise over the last six months to a year trying to get buy-in from all of the constituents of the bank,” Danny Scully of the climate think tank E3G tells Anna. “I've been in meetings where you have some of the lower-income countries say, ‘Well, what is in this reform package for us?’” As for Marrakech this week, Scully says he will be watching to see how much emphasis is placed on supporting the International Development Association, the part of the bank that provides low-interest loans and grants to the world’s lowest-income countries. “I think basically, if you're the bank board, you have to say, ‘We're going to make sure that we prioritize and take care of the lower-income countries first,’” Scully says. “And then if we do that, then we can look into how … all of these newer reforms might look or might work. That is a geopolitical challenge of this reform effort: … making sure that everybody at the table feels like they have some reason to support it, and that everyone can be bought in on it.” ICYMI: The global south is done waiting for rich countries to lead on climate Plus: World Bank’s Ajay Banga on climate — ‘My grandchild's time is running out’ Coming down the pipeline Marrakech might be about the big picture, but it’s worth looking at the bank’s pipeline too, with thanks to our colleague Alecsondra Kieran Si. The biggest project the bank is involved in? $27.3 billion for health services in Colombia. The country that features most prominently on the list of the bank’s future investments? India, with 47 projects. The region where the bank is most present? Though eastern and southern Africa might have the greatest number of projects at 154, South Asia covers the largest dollar amount at $91.9 billion. Read: Inside the World Bank's $301.5B project pipeline (Pro) + Not a Devex Pro member yet? Access all our exclusive reporting and analysis by starting your 15-day free trial of Pro today Coal conundrum 39 --— That’s the number of coal projects that received “back-door support” from the International Finance Corporation, the World Bank Group’s private sector arm, according to a new report. Research from Inclusive Development International, Recourse, and Trend Asia found that IFC investments in banks and financial institutions are supporting coal-fired power plants. Among them is a planned 700-megawatt plant called Jambi 2 in Indonesia. “This is the opposite of the sustainable development that IFC purports to promote, and it is having a devastating impact on coal-affected communities throughout Asia and the entire planet in this time of climate peril,” David Pred, executive director of Inclusive Development International, said in a statement. In response to the report, an IFC spokesperson told Devex that IFC no longer makes equity investments in financial institutions that do not have a plan to phase out investments in coal-related activities. “As of 2023, financial institution clients are required not to originate and finance any new coal projects from the time IFC becomes a shareholder,” the spokesperson wrote. Debt another day During a civil society town hall meeting held Monday afternoon in Marrakech, IMF chief Kristalina Georgieva was, unsurprisingly, asked about debt, Sophie tells us. Georgieva defended the IMF's case-by-case approach to debt restructuring, pointing to the "cacophony" of creditors involved. Recent debt negotiations have taken longer than hoped, she admitted — Zambia took nine months — but she said the process was getting better and faster, as will be shown in the first report of the Global Sovereign Debt Roundtable, due out later this week. This roundtable, which brings together debtor nations and their creditors to try to improve the debt restructuring process, will meet on Thursday in Marrakech. On the agenda: • Whether domestic and external debt should have the same treatment. • How the private sector will be involved in debt relief. • Whether there should be cut off dates for debt restructuring to take place. Eric LeCompte, the executive director at Jubilee USA Network, tells Adva that the main objective is to try to find agreement on where the Common Framework for debt treatments is stuck. It “probably will not be groundbreaking” but there should be progress even if there aren’t many specific decisions, he says. Though do keep an eye out for a potential announcement about a deal to restructure Sri Lanka’s debt. Background reading: Why low-income nations are ‘cracking’ under debt pressure Banner year The U.S. International Development Finance Corporation committed to investing more than $9.1 billion in 132 transactions in fiscal year 2023, a record for the agency. That’s up from $7.4 billion committed the prior year and includes a number of large infrastructure projects, DFC CEO Scott Nathan told U.S. senators at a hearing last week. DFC has also started planning for its reauthorization, which expires in October 2025, and it was clear the issue was on the minds of lawmakers. Most of the senators at the hearing seemed on board to support a reauthorization of DFC, though there were questions about how it can balance its foreign policy and development mandates. Expect discussions about which countries the agency can invest in, its focus on development, and how its equity investments are funded. Nathan said that changing the current budgetary rules around how equity investments are treated would allow DFC to fully use that instrument and is a key priority for the agency. But he also said that Congress should consider increasing the overall lending limit, its ability to spend fees, hiring and incentives and country eligibility. What we’re reading Listen: What do borrowing countries think of MDB reform? [ODI] The Center for Global Development has a new MDB reform tracker. [CGD] Countries pledged $6.3 billion to the Green Climate Fund. [ABC News] Anna Gawel contributed to this edition of Devex Invested.