World Bank chief pushes internal reforms at spring meetings

[April 13, 2024]  By David Lawder

WASHINGTON (Reuters) - World Bank President Ajay Banga said on Friday he plans to highlight a range of process improvements next week to speed up the development lender's loan approvals, improve the accountability of its 16,000 employees and attract private capital to projects.

Banga told reporters ahead of the World Bank and International Monetary Fund spring meetings that the development lender had reduced its average 19-month project approval time by about three months and would cut it by another three months by the middle of next year.

Banga, a former MasterCard CEO who took over the helm of the World Bank last June, is guiding the lender's expansion of its traditional development and anti-poverty mission to include fighting climate change and other global crises. This requires far greater resources and a major expansion of its lending capacity, which was $128.3 billion in the fiscal year ended June 30, 2023.

The World Bank adjusted its loan-to-equity ratio to unlock another $40 billion of lending capacity over 10 years, but this falls far short of the trillions of dollars needed annually to finance the global energy transition and climate mitigation.

Banga said more steps were underway, including joint work with other multilateral development banks and credit ratings agencies to unlock the use of callable capital, the emergency capital pledged by governments but not paid in.

Banga said the World Bank will launch a new enterprise-wide platform for loan and insurance guarantees that puts it on a path to more than triple its guarantee issuances to $20 billion by 2030.

But a major new securitization initiative could also attract vast amounts of private capital.

World Bank Group President Ajay Banga attends the 54th annual meeting of the World Economic Forum, in Davos, Switzerland, January 17, 2024. REUTERS/Denis Balibouse/File Photo

"We are at the beginning of a years-long effort to build a securitization platform for the emerging markets, making it easier for institutional investor - pension funds, insurance companies and sovereign wealth funds - to bring some portion of the $70 trillion they manage to these developing countries."

The World Bank also is reforming its business planning and budgeting processes to find savings to redeploy elsewhere, including $144 million from improving productivity at its core International Bank for Reconstruction and Development and International Development Association arms, Banga said.

He added that a unified approach to real estate had saved the lender $150 million for 2023 and 2024.

"We want to start every year looking for 5% productivity savings from our expenses," Banga said. "This is all part of the work that we are trying to do to get the plumbing of the Bank to work even better."

In addition, the World Bank has recently launched a new "corporate scorecard" to measure its performance based on development and climate outcomes rather than dollars deployed. The new scorecard has 22 categories, down from the previous 153, Banga said.

(Reporting by David Lawder; Editing by Paul Simao)

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