The World Bank is ready with a new vision and mission that goes beyond its focus on poverty reduction to address global challenges such as climate change and is seeking the mandate from its shareholders to look at innovative ways to mobilise more lending capacity.
The endorsement of a new-look World Bank, set up almost 80 years ago, is expected from finance ministers at the annual meeting in Marrakech next week. The changes coincide with Ajay Banga taking over as the first head of World Bank from the private sector, who is seeking to change the way the agency operates, and come weeks after leaders from G20 nations endorsed the need for an overhaul of multilateral development banks (MDBs), a key agenda under India’s presidency.
India had set up an independent expert group on the issue, whose first set of recommendations are being discussed, including the need to provide more capital to the MDBs. The panel, co-chaired by Larry Summers and N K Singh, has submitted its second report to finance minister Nirmala Sitharaman and will be discussed in Marrakech. The report titled ‘Bigger, Better, Bolder’ seeks to suggest ways to tap more private capital and improve speed and efficiency of multilateral development banks.
While a series of steps have already been initiated to increase the World Bank’s lending capacity by $50 billion over the next 10 years, using existing resources, additional ‘innovative measures’ have been proposed to mobilise another $106 billion, if not more, during this period. The options range from a higher bilateral guarantee limit to a portfolio guarantee platform and use of hybrid capital to generate more resources. More steps are in the pipeline to ensure that more funds are available from all World Bank arms, which follow the ‘One World Bank’ approach in dealing with clients.
‘Our new vision is to create a world free of poverty on a livable planet and our new mission is to end extreme poverty and boost shared prosperity on a livable planet,’ a report to the governors on World Bank Evolution released a few days ago said. The document pointed to a series of estimates on the new funding requirements, and listed the new global challenges that the World Bank intends to address (see graphic).
Also on the menu are changes in the way it operates – from collaborating with other agencies to mobilising more private capital, a review of the compensation structure to promote private capital mobilisation, reducing risk aversion and making processes faster. A new scorecard to monitor results that are aligned with the new mission is also proposed.
