In a changing world, where do World Bank reforms stand?

Under pressure from shareholders, the World Bank has undertaken a series of reforms in recent years — outlined in its own “Evolution Roadmap” and reinforced by the Group of 20 major economies’ road map for multilateral development banks agreed to last year. But the political and economic landscape that drove those reforms has shifted dramatically since the start of the year, largely because of Donald Trump’s return to the U.S. presidency. As the bank’s largest shareholder, his administration is reshaping what’s possible. Years of intense discussion about how MDBs must respond to global challenges “has led to a shared set of objectives,” Nancy Lee, a senior policy fellow at the Center for Global Development, told Devex. “I don’t think you can say, however, that the implementation has progressed as fast as it should.” The question now is where things go from here. The World Bank has oriented itself around job creation while going noticeably quiet on climate. That marks a sharp shift from the original evolution road map, which promised to expand the bank’s mission beyond extreme poverty to tackle global challenges and public goods, including climate change. “We are incredibly far away from that moment we were in of the evolution road map,” Clemence Landers, vice president at the Center for Global Development, told Devex. “On a lot of things, the bank has sort of gone into stealth mode.” Just a year ago, the bank was discussing global public goods and talking about raising money for a Livable Planet Fund to incentivize countries to borrow for projects that tackle global challenges, she said. “It was a really radically different world. And we’re simply no longer kind of fully there, at least visibly.” The shifts are creating shareholder tension. Many feel the agreed-upon agenda has dropped away because of Trump’s election, Landers said. “The reality is it’s just not a politically palatable agenda right now with the biggest shareholder. So the question is what’s the direction of travel for the institution?” Despite the changing politics, the World Bank has pressed ahead with some reforms. It has stretched its balance sheets to lend more, streamlined and accelerated processes, and addressed how it works with countries. The World Bank declined to comment publicly for this article, but in June, its president, Ajay Banga, said, “we’ve been asked to move faster, simplify, operate more efficiently, deliver more impact. What we’ve tried to do over the last couple of years is respond with a set of reforms aimed at one simple goal. … be a better partner to our private sector and government clients.” Real progress has been made, Lee said, but there is still room for improvement at the bank and other MDBs, particularly in measuring and reporting impact, improving how they engage with countries, and how they mobilize private finance. “Those three areas are where not only more progress is needed, but also are more important to having these institutions change in ways that benefit or meet the moment,” she said. Bigger The most visible progress has come in efforts to grow the balance sheets, experts said, highlighting how the bank found ways to stretch existing funds and deployed innovative financing tools. One big change was dropping the floor of the equity-to-loan ratio used to assess risk and determine how much money it must keep in reserves. Last year, the bank lowered that ratio to 18%, in part by aligning more closely with commercial banks’ risk practices. It more systematically mapped how it would respond to financial stress, an exercise standard for commercial banks but uncommon among unregulated MDBs, said Chris Humphrey, a senior research associate at ODI Global. But the bank does not appear to be making use of that additional lending headroom. The equity-to-loan ratio for fiscal year 2025, which ended June 30, was 21.6%, up slightly from 2024. It’s unclear exactly why, but it could be due to staff capacity, borrower debt constraints, or the hassle factor involved in World Bank loans, Humphrey said. Demand may also be soft, or operational practices haven’t caught up with more relaxed risk tolerance, other experts said. Still, the unused capacity could prove critical in responding rapidly to the next global crisis, such as a pandemic, Humphrey said. Meanwhile, the World Bank’s International Bank for Reconstruction and Development has increased its commitments, reaching nearly $41 billion in 2025, up from about $37.5 billion the previous year. “The balance sheet is growing but it’s still not close to exhausting its potential,” Landers said, adding, “When you look at the balance sheet of the IBRD, it’s a very strong institution in a very strong position that’s actually in expansion mode.” Alongside the ratio change, the bank has also pursued other innovative financing instruments to raise funds, including hybrid capital and portfolio guarantees. Nearly a dozen countries have pledged to support those funding instruments. Better When Ajay Banga took over as president of the World Bank, he focused on the bank’s “plumbing”— reducing bureaucracy and accelerating project timelines. Project approval time had dropped to 13 months from 19 months as of June, with some projects moving in under a month. Humphrey said safeguard reforms could also help to streamline and speed projects but will depend on shareholder risk appetite. ”Development is risky and complicated. Mistakes are going to happen,” Humphrey said, adding that if the bank is structured to avoid every potential misstep, it won’t get anything done and countries will turn elsewhere for financing. As part of its reform efforts, the bank has also turned its attention to private capital mobilization, and job creation, the centerpiece of its Spring Meetings. In June, Banga said that the World Bank Group had mobilized $66 billion in private capital the previous year. It launched the Private Sector Investment Lab in June 2023, which has already made several recommendations that have been implemented. That includes consolidating all of the bank’s guarantee programs under one platform — a change implemented last year when they were all brought under the Multilateral Investment Guarantee Agency, or MIGA. The goal: grow the guarantee portfolio from $8 billion to $20 billion by 2030. Other lab proposals include developing solutions to mitigate foreign exchange risk and securitizing some of the International Finance Corporation’s transactions though an “originate-to-distribute” model. Banga told Bloomberg last month that the World Bank Group is piloting a securitization deal with Goldman Sachs Group Inc. that will combine IFC projects into a package to offer the market in the next four to five months. But the bank’s track record on private capital mobilization remains weak, Kevin Gallagher, director of the Global Development Policy Center at Boston University, told Devex. He urged the bank and other MDBs to learn from the past. One problem, he said, is that the MDBs private-sector arms haven’t connected well with other parts of the institutions. There need to be “real institutional reforms about that,” he said. Banga has tried to address that by merging all of its structures in 40 countries to give clients a single point of contact and positioning the World Bank Group as a more unified whole. In 2024, the bank tried “to be more granular and less just solely philosophical about it, and get more specific in the country context,” Gallagher said, adding that more needs to be done. “The IFCs of the world should be taking much more risk and asking for much less return and they’re not quite there yet.” That could mean a shift in shareholder risk appetite or other creative solutions, such as the Frontier Opportunities Fund launched by IFC to to absorb early-stage equity risk. IFC is working on a new strategy but has faced lighter scrutiny than other arms of the bank, raising questions about whether reforms there are happening mostly behind closed doors, Landers said. “Given how much talk there is around private capital mobilization, around engaging with the private sector, it really has felt for a while now that the IFC has sort of been given a little bit of a free pass on all of this reform work.” The G20 road map also directs MDBs to support country-led platforms and expand co-financing. The bank has piloted a new Country Partnership Framework in Pakistan, and introduced Country Climate and Development Reports to help countries prioritize climate and development goals. But Gallagher noted that country platforms, once the “buzzword,” have faded from view as shareholder politics shifted. “The performance of the Western-backed MDBs after the road map has been wholly disappointing,” he said. More effective One of the bank’s signature reform efforts has been the creation of a new scorecard, cutting indicators to 22 from 150. But critics said that alone is not enough. María José Romero, a policy and advocacy manager at Eurodad, told Devex the bank “has emphasised the relevance of the WBG scorecard as its way of ensuring progress towards a ‘better’ bank, but there is still much to be done for it to be a significant step. That includes greater clarity on how the WBG measures job quality and its contribution to socio-economic structural transformation.” The Center for Global Development’s Lee said the bank has room to improve when it comes to impact measurement. Procurement rules have also been updated, requiring at least 50% quality weighting for most procurement, and large contracts — of more than $10 million — are encouraged to do early market engagement to attract high-caliber bidders, and smaller contracts will be bundled to reduce supplier payment risks. Another new requirement mandates that 30% of labor costs should be locally procured for its civil works projects — a measure the bank frames as supporting job creation, though others see it targeted at China and a way to appease the U.S. The G20 MDB road map also lays out ways that MDBs can be more effective, including closer cooperation. To that end, the World Bank has signed agreements, such as the Full Mutual Reliance Framework with the Asian Development Bank and a joint IFC-European Bank for Reconstruction and Development framework, aimed at streamlining processes and reducing borrower burdens.