2023-05-03 20:10:44
DISPATCH — Unsurprisingly — he was the only candidate in the running, Ajay Banga was elected president of the World Bank (WB), as the institution announced after a meeting of its board of directors .
A candidate from the United States, a 63-year-old business leader, the American-Indian has assured, on several occasions, that he wants to give priority to financing the fight against global warming and to the reform of the WB. He is expected to take office from June 2, for a five-year term.
An appointment designed for geopolitics
Traditionally, the WB is the preserve of the United States; since its creation, in the wake of the Bretton Woods agreements in 1944, it has always been an American citizen who has been at its head. But this hegemony was increasingly challenged, in particular by the major emerging countries such as Brazil, China, India and Russia, which for several years have wanted to see their place in international financial institutions strengthened.
With geopolitical tensions raging, the US decision to nominate Mr. Banga, who was born and raised in India, was anything but trivial. The United States is trying to get closer to the other Asian giant to counter Chinese influence in the region. Moreover, as soon as he was appointed, Ajay Banga embarked on a world tour, aiming to promote his candidacy and obtain the support of as many countries as possible, in particular emerging and developing countries.
He was thus able to count on India, Kenya and even South Africa, which supported his candidacy.
“I think the campaign is going very well,” said a US Treasury official at the end of March. And to add: “His experience is seen as an essential point, as is his knowledge of the private sector and of partnerships between private and public, essential within the framework of the World Bank”.
From theory to practice
“We believe that his experience will be very important in helping the WB to strengthen the mobilization of the private sector. During our discussion, he spoke of very interesting practical solutions to strengthen this private sector commitment”, added Mr. Bello.
“When we know that we may need funding, it is difficult not to support the candidate who will be elected”, however, confided to AFP an African minister present in Washington during the spring meetings of the WB and of the International Monetary Fund (IMF), in early April.
Major financial institutions are monitored. And for good reason ! More than sixty poor and emerging countries are over-indebted, and are therefore dependent on them… Especially since the rise in the rates of the main central banks affects these countries’ access to financing, while making the costs, further complicating the budgetary situation of these countries.
In other words, the hardest part remains to be done for Ajay Banga, who will have to meet expectations on two burning and linked issues: the reform of international financial institutions, starting with the WB, and an increase in the financing of the fight against global warming.
The needs are enormous, as the IMF has repeatedly pointed out: a minimum of 1,000 billion dollars per year will be necessary, over the next few years, to help emerging and developing countries to meet them.
During the spring meetings, the main contributors to the WB agreed to increase its financing capacities by 50 billion dollars over the next ten years. A significant effort, but notoriously insufficient compared to the needs.
In response, Ajay Banga made no secret of his desire to involve the private sector: “There is not enough money, whether in the multilateral development banks, in the major governments of the world developed, in civil society, even with the most philanthropic intentions”, he insisted at the beginning of March.
Among the recommended solutions, Mr. Banga envisaged in particular rethinking the funding approach by specific projects, so as to be more incentive for the private sector. He will now have the opportunity to move from theory to practice.
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