One of the key thrusts of India’s G20 presidency has been the urgent need to reform multilateral development banks (MDBs). And the World Bank features prominently in the New Delhi Declaration. US President Joe Biden is putting in a lot of effort to ensure that more funds are available with the World Bank and is looking at reforming the institution. The man entrusted with this job is Ajay Banga, President of the World Bank.
In an interview with Rahul Kanwal, News Director of India Today and Aaj Tak, and Executive Director of Business Today, World Bank President Ajay Banga—a former President and CEO of Mastercard—talks about how he plans to reform the World Bank, the debt crisis, and more.
World Bank President Ajay Banga said that the idea of fighting poverty, while separating it from climate, pandemics, or food insecurity, does not make sense because these are intertwined crises. "When the western world speaks about climate, they’re speaking about emissions-heavy growth. When the developing world speaks, it's about soil degradation, biodiversity, lack of rainfall, and catastrophes,” added Banga.
“The vision is to go from just poverty and prosperity to say, we want to create a world free of poverty on a liveable planet. That liveable planet [bit] allows us to widen the aperture through which we look at the world to include climate, pandemics, fragility and food insecurity—so you can dedicate your resources to the intertwined nature of these challenges,” said Ajay Banga, President of World Bank.
Talking about reforming MDBs, Ajay Banga said, "My focus has been to get to the better bank. And the better bank idea is the vision and mission we were talking [about], and then get the right partnerships going for this bank with other MDBs.” He added, “If I can do these three things—a clear vision and mission, good partners with a number of people, including crowdsourcing private finance money, and get the right capital work going—I think then we get the right to go back and look at a bigger bank.”
Ajay Banga disagreed that the World Bank is Washington-dominated while highlighting that at the World Bank, 55 per cent of the employees are outside of the US. He said, "What we do with every country is a three-year country partnership framework; it agrees with the country what the priorities for it are. That’s not done in [Washington,] DC; it’s done in New Delhi… Jakarta… Nairobi."
Rahul Kanwal asked if the US is showing greater urgency about arranging more funds for the World Bank as China has been looking to make deep inroads. Responding to this, Ajay Banga said, “No, that’s not true… I think that’s the conclusion drawn from geopolitics. When I got on board with the World Bank, and I met President Biden, he was very clear [about] the leverage ability of the bank’s resources. So let me give you a very simple math: if you get $1 of capital into the bank and everybody else also puts in money to keep their shareholding, that leads to $6 or $7—the US puts in $1, you end up with $6 or $7 in total in capital, you lever that five times in the balance sheet at a AAA rating, and you end up with $35 to lend in the world…”
“… You show me a government programme of any country where $1 becomes $35, and I’ll give you a medal. So the President of the US basically said to me, ‘this is a great programme… $1 becomes $35… I should back you every day of the week.’ That’s where he’s coming from... So I think, yes, there is the geopolitics… But China is a large shareholder [of the World Bank]. And I have an excellent working relationship with them. So as far as I’m concerned, there’s work to do together,” added Ajay Banga.
Ajay Banga emphasised on enabling the private sector, without whom Paris Agreement climate goals and achieving SDGs cannot be met. He said, “You’re not going to get to these goals with multilateral bank balance sheets, or with government balance sheets; you’re going to need the private sector balance sheet, ingenuity, technology and people.”
Ajay Banga explained how the IMF and the World Bank together, with the IMF taking the lead on it, created a Global Sovereign Debt Roundtable. He further said, "The debt that was taken by some of these countries in the time period of low interest rates was probably either not well enough thought through or well enough planned for… This entire debt situation needs to be taken on a war footing."
World Bank President Ajay Banga said, “I told PM Modi jokingly that I’m the biggest example of ‘Make in India’—because I was born here, did my schooling from here, went to college from here, did an MBA from here, and I have not studied anything outside India—not even a training course—after moving out of India. So, I’m the ultimate example of Make in India.”
“What India was able to do at the G20—not only was it successful in bringing out a communiqué, more than that [what is important] is the global positioning and branding of India during the G20… meetings were held in 60 cities, people went everywhere—this is not normal; in addition, India’s efforts at digital public infrastructure, along with the few other countries, got noticed; even the World Bank made a report about it. So, the benefits for India are not only in terms of leadership, but also of India’s own global image, and I think it has been quite well handled,” said Ajay Banga.