Incoming World Bank Chief To Face Challenges

jay Banga, US President Joe Biden’s pick to run the World Bank, will face a tough slate of issues around the institution’s finances and capital structure from the get-go, thorny problems he must address as he reshapes the bank into a force for combating climate change on top of its traditional role as a poverty fighter.

Biden and his team have ambitious plans for overhauling the 77-year-old World Bank, which critics have said under its outgoing chief David Malpass was too timid in financing climate initiatives and still funds substantial fossil fuel projects across the developing world.

The key to it all, of course, is money, and as organized and funded now, the World Bank would be stretched to meet those goals.

Banga’s nomination announced on Thursday, won a round of rapid endorsements as top finance leaders met on Friday in India, a sign his ascendance by early May – or possibly sooner is all but assured, though other member countries can also submit nominations through March 29 before the World Bank’s governors choose the president.

Even before he takes office, the former Mastercard Inc chief is expected to start working with his numerous constituencies as early as April when top officials meet in Washington at the World Bank and International Monetary Fund’s spring meetings. Member countries are expected to approve initial moves to stretch the bank’s balance sheet to free up more funds for climate projects, pandemic preparedness, and other priorities.

If confirmed, he will jump into high-profile talks in June hosted by French President Emmanuel Macron and Barbados Prime Minister Mia Mottley focused on developing a new global financial pact to reform how rich countries finance poor countries grappling with climate-driven damages.

Under Banga’s leadership, Mastercard became among the first companies to set net-zero emission targets under the Science Based Targets initiative. He also serves on the advisory board of Beyond Net Zero, a climate finance fund.

Biden administration officials touted Banga’s decades of experience building global companies and public-private partnerships to fund responses to climate change and migration.

“Ajay has proven his ability as a manager of large institutions and understands investment and the mobilization of capital to power the green transition,” said John Kerry, the U.S. special envoy on climate change.

Reuters/Samuel Isaiah