March 30, 2023

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“The new boss of the World Bank must explain to its client countries that they are not decision-makers, but partner countries”

KDays after World Bank President David Malpass announced his resignation in mid-February, the United States surprised by appointing Ajay Banga as his successor. The 63-year-old Indian American was the boss of MasterCard, which he turned into a global payment platform. He has no experience in development, let alone in an international organization. America has instead chosen a specialist in organizational change. US Treasury Secretary Janet Yellen welcomed the nomination and briefed the new president on February 23. “World Bank should be created to address global challenges like climate change”.

read more: The article is reserved for our subscribers In the wake of David Malpass’ resignation, the question of the World Bank’s role in addressing economic and climate crises

Development banks play an important role in low- and middle-income countries, which attract only 20% of the planet’s investments in the renewable energy sector, whereas they alone account for 90% of global demand. David Malpass, who was appointed as the head of the World Bank by former US President Donald Trump, does not have an exact profile. Many NGOs accused him, in the fall of 2022, of being a climate skeptic who, when asked about the role of fossil fuels in global warming, replied that he did not.« [était] not a scientist”.

While the United Nations estimates investment needs of 125,000 billion dollars (117,000 billion euros) to achieve carbon neutrality by 2050, the World Bank needs to redouble its efforts in this sector. Although already allocated to it a third of its financing, rich countries want this share to be higher and, above all, to increase its financial capacity. A report by the G20 working group, published in 2022, explains that multilateral development banks could increase their efforts by 500 to 1,000 billion dollars, especially by increasing fundraising in markets.

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Investing in resilience

Problem: Poor countries don’t have the same idea. First, they fear that the company, by taking on more debt without increasing its capital, will downgrade its rating by financial rating agencies, forcing it to borrow at higher rates. Second, they fear that these efforts will be detrimental to development.

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