Marrakech, MOROCCO – During the 2023 Annual Meeting Plenary in Marrakech, Morocco, World Bank President Ajay Banga delivered his first major speech since taking office, focusing on the bank’s commitment to fostering global cooperation and addressing shared challenges. Banga outlined the progress made on the Evolution Roadmap, shared ongoing reforms within the 78-year-old institution, and presented his vision for the World Bank in the current global context.
Banga emphasized the significance of the World Bank’s Global Public Goods Fund, which aims to incentivize cross-border collaboration to tackle global challenges. However, he noted that, in the past, the fund relied solely on the income of the International Bank for Reconstruction and Development (IBRD), limiting its potential.
In a significant shift, Banga announced that the World Bank is now extending an invitation to governments and philanthropic organizations to participate in the fund. This expansion is expected to enhance the availability of concessional resources and elevate the fund to the status of a “Livable Planet Fund.”
He highlighted Uruguay as the first country to benefit from reduced interest rates as a direct result of meeting climate performance targets. This innovative approach will be scaled up, and the World Bank will continue to explore other ideas aimed at creating incentives within its ecosystem of financial instruments.
The World Bank is also exploring the possibility of offering loan maturities of 35 to 40 years to assist countries in making long-term investments in social and human capital.
“We’re investigating if we can reduce interest rates to incentivize exiting from coal as part of energy transitions,” Banga explained. “And in countries that utilize both the International Development Association (IDA) and IBRD, we’re looking to find ways to encourage a renewable energy transition by increasing concessional finance in the mix.”
Banga acknowledged the Bank’s substantial commitment to addressing compounded challenges, including the war in Ukraine, the impact of the pandemic, and rising inflation. To continue their support, they need to replenish their three-year Crisis Response Window. The objective is to raise $4 billion for the Crisis Response Window Plus. Banga highlighted that the United States has requested $1 billion from Congress, and countries like the Nordic nations have pledged donations. However, there is still a significant funding gap, and time is running short.
“We are looking for others to step forward. We need our donors’ help to reload this fund and carry us through our next IDA cycle,” Banga stressed. “If we really want to incentivize change, we can’t just wish it – we need to fight for it. Nowhere is this truer than IDA. We are pushing the limits of this important concessional resource, and no amount of creative financial engineering will compensate for the fact that we need more funding.”
Banga urged donors, shareholders, and philanthropic organizations to join the World Bank in their mission and bring ambition to this endeavour. He emphasized that without their active involvement, these instruments remain theoretical.
The World Bank is actively recruiting new partners and reimagining partnerships to work together with multilateral development banks, emphasizing the importance of unified efforts to coordinate global action, catalyze change, and multiply impact. This approach will make it easier for governments to access resources from a diverse set of multilateral development banks, focusing on lending through a single country platform.
In conclusion, Banga emphasized the importance of sharing ideas and collaborating with a wide array of stakeholders, including think tanks, the private sector, and civil society. He stressed that the commitment to creating a positive impact should begin with the institutions themselves. ZIJ/16/10/2023