WASHINGTON — When Ajay Banga took charge of the World Bank almost a year ago, there was no shortage of stressors on the global economy: inflation affecting countries drowning in debt, a once-in-a-generation pandemic, climate disasters and Russia’s invasion of Ukraine .
Add to that the war between Israel and Hamas and rising tensions between powerful countries, 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 we have clearly seen major setbacks in recent years – combined with fragility, conflict and violence, combined with climate change, are entering a perfect storm,” Banga said in an interview with The Associated. Press. “We have to put all our efforts into this.”
Banga highlighted new initiatives announced at the meetings, including plans to provide electricity to 300 million people in Africa by 2030 and provide access to healthcare to 1.5 billion people worldwide in the same time frame.
He emphasized the bank’s role in financing climate projects and renewing its focus on large cross-border projects that could affect large numbers of people, especially as member states become increasingly competitive in trade and isolationism increases.
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 burning fossil fuels is causing global warming. Malpass apologized and said he had misspoken.
President Joe Biden, who nominated Banga, said after Banga’s approval by the bank’s board that the former Mastercard CEO would “help steer the institution as it evolves and expands to address global challenges that directly impact its core mission of poverty alleviation – including climate change. .”
Now Banga is under pressure to put climate at the forefront, while climate activists and developing country advocates have their own ideas about how to move forward.
Simon Stiell, the UN climate secretary, recently said that climate finance must include decision-making between developed and developing countries as a way to build a financial system ‘fit for the 21st century’.
Banga said developing countries “feel that they were not the ones who created this situation – their energy consumption is still small compared to many developed countries.” But under the World Bank model, because countries vote on many issues based on an allocated share, the large number of shares in the bank often limits smaller countries in their decision-making on issues that affect them most.
“There’s a whole range of things that the World Bank is doing to give countries a helping hand, rather than trying to force them into situations” that are unfavorable to smaller countries, he said.
The bank is the world’s largest financier of climate projects in developing countries, generating $38.6 billion in the 2023 budget year.
Another challenge is dealing with powerful shareholders, namely the US and China, as trade tensions have increased.
“I think we can find spaces where the potential for geopolitics and fear of national security does not interfere with what we want to do with development,” he said, pointing to the new project to expand health care to those with limited access .
He also cited World Bank funding for a project with the African Development Bank that will give access to electricity – a “basic human right” – to more than 300 million people by 2030.
“There are 1.1 billion young people in the South who will be ready for a job in the next ten years,” said Banga. “It’s hard to get people productive if you don’t give them access to electricity.”
Current conflicts around the world are putting the bank at the forefront of recovery efforts.
A World Bank and UN report this month said that the cost of the destruction caused by the war between Israel and Hamas had reached about $18.5 billion, equivalent to 97% of the Western United States’ combined gross domestic product. Jordan Bank and Gaza in 2022. Tens of thousands of people have been killed in the war, which has destroyed homes, commercial areas, water treatment plants, schools, highways and hospitals.
“While we can help in the short term with humanitarian aid money, which we have done,” Banga said, “the problem right now is that this aid is entering Gaza.”
He said the World Bank has brought together a group of Palestinians, Israelis, Americans and Europeans to try to figure out what the bank can do to raise investments after the war is over.
“The World Bank will have a role to play in the shorter term, but also in the medium and longer term,” he said.
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AP Science Writer Seth Borenstein contributed to this report.