There was no shortage of stressors to the global economy when Ajay Banga took charge at the World Bank almost a year ago: inflation eating at nations drowning in debt, a once-in-a-generation pandemic, climate disasters and Russia's invasion of Ukraine.
Factor in the Israel-Hamas war and rising tensions between powerful nations, and today's agenda is even fuller as the World Bank and the International Monetary Fund hold their spring meetings in Washington this week.
“The world’s intertwined challenges of poverty — which clearly we have seen great setbacks over the past few years — combined with fragility and conflict and violence, combined with climate change, is coming into a perfect storm,” Banga said in an interview with The Associated Press. "We need to put all of our efforts into this.”
FILE—World Health Organization Director-General Tedros Adhanom Ghebreyesus (R) speaks as World Bank President Ajay Banga (L) participate at an event on expanding health coverage for all, during the IMF-World Bank Group spring meetings in Washington, DC, on April 18, 2024
Banga highlighted new initiatives being announced at the meetings, including plans to provide 300 million people in Africa with electricity by 2030 and 1.5 billion people worldwide with health care access over the same time frame.
He stressed the bank's role in financing climate projects and renewing its focus on major cross-border projects that can affect large numbers of people, especially as member nations increasingly compete in trade and isolationism is on the rise.
Banga took over after David Malpass resigned as the bank's president last June following a backlash when Malpass appeared to cast doubt on the science that says the burning of fossil fuels causes global warming. Malpass apologized and said he had misspoken.
President Joe Biden, who nominated Banga, said upon Banga's approval by the bank's board that the ex-Mastercard CEO “would help steer the institution as it evolves and expands to address global challenges that directly affect its core mission of poverty reduction — including climate change.”
Now Banga is under pressure to deliver on putting climate at the forefront, while climate activists and advocates for developing nations have their own ideas about how to proceed.
FILE UN climate chief Simon Stiell delivers a speech on stage at Chatham House, in London, on April 10, 2024.
Simon Stiell, the U.N. climate secretary, said recently that climate finance needs to include decision-making between developed and developing countries as a way to build a financial system "fit for the 21st century.”
Banga said developing nations “feel like they weren’t the ones who created this situation — their energy consumption is still small in proportion to many developed nations." But under the World Bank model, because countries vote on many issues based on an allocated share of stocks in the bank, smaller countries are often limited in decision-making on issues that affect them most.
"There are a whole series of things the World Bank is doing to be a hand on countries' backs, rather than trying to force feed them into situations" that are unfavorable to smaller nations, he said.
The bank is the world’s largest financier of climate projects in developing countries, delivering $38.6 billion in the 2023 budget year.
Another challenge is dealing with powerful shareholders, namely the U.S. and China, as trade tensions have risen.
"I think we can find spaces where the potential for geopolitics and national security fears don't interfere with what we want to do with development," he said, pointing to the new project to expand health care services to people with limited access.
He also cited World Bank funding for a project with the African Development Bank that will give electricity access — a “basic human right” — to more than 300 million people in 2030.
FILE—World Bank President Ajay Banga speaks during an event about expanding health coverage for all, during the IMF-World Bank Group spring meetings at World Bank headquarters in Washington, DC, on April 18, 2024.
“There are 1.1 billion young people in the Global South who are going to become ready for jobs in the next decade,“ Banga said. ”It's hard to get people productive if you don't give them access to electricity.”
Current conflicts around the world are pushing the bank to the forefront for recovery efforts.
A World Bank and U.N. report this month said the cost of the destruction from the Israel-Hamas war had reached roughly $18.5 billion, equivalent to 97% of the combined gross domestic product of the West Bank and Gaza in 2022. Tens of thousands of people have died in the war, which has destroyed housing, commercial areas, water treatment plants, schools, highways and hospitals.
“While we can help in the short term with money for humanitarian aid, which we've done," Banga said, "the problem is currently getting it into Gaza.”
He said the World Bank has assembled a group of Palestinians, Israelis, Americans and Europeans to try to figure out what the bank can do in bringing together investments after the war ends.
“The World Bank is going to have to play a role in the shorter term, but also on medium-term and longer-term issues,” he said.