Washington –
Ajay Banga, who was elected by US President Joe Biden to run the World Bank, will face the difficult issues he will have to deal with as he transforms the World Bank into a force to fight climate change. A change in addition to his traditional role as a poverty fighter.
Biden and his team have an ambitious plan to overhaul the 77-year-old World Bank, but critics say that under outgoing World Bank President David Malpass, the It has been criticized for being cowardly about funding volatility and funding significant fossil fuel projects across the developing world.
Of course, the key to everything is money, and as organized and funded now, the World Bank will do everything in its power to achieve these goals.
Banga’s nomination, announced on Thursday, won a quick string of support when India’s top financial leaders met on Friday, 29 days before the World Bank’s president chose him.
Even before taking office, the former Mastercard Inc chief expects to start working in many of his constituencies in April, when top officials meet in Washington at the World Bank and International Monetary Fund spring meetings. Member States are expected to approve initial moves to expand bank balance sheets to free up more money for climate projects, pandemic preparedness and other priorities. I’m here.
If confirmed, he is set to dive into high-profile talks hosted by French President Emmanuel Macron and Barbados Prime Minister Mia Motley in June to discuss how wealthy countries are helping poorer nations grapple with the damage caused by climate change. The focus is on developing a new global financial agreement to reform how funding is provided.
Under Banga’s leadership, Mastercard became one of the first companies to set a net-zero emissions target under its Science Based Targets initiative. He is also a member of the Advisory Board of Beyond Net Zero, a climate finance fund.
Biden administration officials praised Vanga’s decades of experience building public-private partnerships with global corporations to fund climate change and immigration responses.
John Kelly, US Special Envoy for Climate Change, said: “Ajay has demonstrated competence as a manager of large institutions and understands the investment and mobilization of capital to advance the environmental transition.
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An even tougher challenge awaits Banga to win additional capital from member states. This will be particularly difficult for the United States, the World Bank’s largest shareholder, due to political strife between the Biden administration and the Republican-controlled House of Representatives. The House of Representatives has a lot of clout in the country’s purse strings, and its leaders are unwilling to expand the World Bank’s role in fighting climate change.
According to the World Bank’s annual report, in FY2022, the World Bank committed more than US$104 billion to projects around the world. Experts say countries will need trillions of dollars to fight and adapt to climate change.
Before the increase was even considered, US officials said the World Bank’s debt and equity levels were high, given the reluctance of the politically divided US Congress to allocate more funds directly. Changes to ratios and other rules could free up more money to fight climate change, he said. Capital increase.
An independent report produced for the major G20 economies says changing the way banks and other multilateral development banks (MDBs) operate could unlock hundreds of billions of dollars in additional funding. says there is.
But some middle-income countries are worried that their banks’ AAA credit ratings could drop, raising borrowing costs, Mark Malloch Brown, head of the Open Society Foundations, told Reuters. rice field.
“Middle-income countries worry that borrowing costs will rise as Western countries refuse to provide more cash.”
Iskander Erzini Vernoit, director of the Imal Initiative for Climate and Development, a climate think tank based in Morocco, said the United States has contributed only US$2 billion of the US$100 billion climate finance pledged by rich countries. He said he needed to invest more.
“The shift of blame to MDB managers has only gotten us so far and not enough to raise funds to tackle polycrisis at scale,” he said.
