US President Joe Biden’s nomination of IndianAmerican Ajay Banga to the post of World Bank President reflects an attitudinal change in the world’s leading economy.
More significantly, it is in tune with India’s longstanding demand for reforms in global institutions, such as the United Nations, World Bank and International Monetary Fund (IMF), to reflect today’s changed geopolitical reality.
Timing is critical The timing of the announcement is also crucial – it came at a time when Indian Prime Minister Narendra Modi added his voice to the calls for reforms of global lenders like World Bank, at the G20 Finance Ministers and Central Bank Governors (FMCBG) meeting in Bengaluru. Raised in India, Ajay Banga has a unique perspective on the opportunities and challenges facing developing countries and how the World Bank can deliver on its ambitious agenda to reduce poverty and expand prosperity.
A statement from the White House said, “Ajay is uniquely equipped to lead the World Bank at this critical moment in history. He has a proven track record managing people and systems, and partnering with global leaders around the world to deliver results.”
Erosion of trust
PM Modi has repeatedly pointed out that the trust in international financial institutions has eroded. This, he said, is partly because they have been slow to reform themselves. Biden’s choice for the new World Bank chief suggests that he endorses India’s call for urgent reforms of the United Nations and other global institutions.
Banga will be stepping into the all-important role at a time when poverty rates, debt and stagflation are exploding around the developing world. This is a moment when the World Bank is undergoing a critical structural change.
David Malpass, the current President of the World Bank, announced abruptly on February 15 that he will leave his position in June this year, after being denounced by environmental groups as a “climate denier”. He clashed repeatedly with US Treasury Secretary Janet Yellen over the pace of reforms to change the way the World Bank responds to the needs of countries facing overlapping challenges.
On India model
Ajay Banga could pivot changes in the World Bank’s development paradigm with the India model. The new grammar of political reforms and governance is an evolving rule book that will have implications on how economic progress gets translated into social equalities, an area that Banga may like to spend some time on in the World Bank.
The evolution of reforms manifested through different policy initiatives confirms the belief that it needs to be reoriented in a manner different from the usual approaches of the conventional IMF-World Bank consensus view.
Barring some last-minute challenge, US President Joe Biden’s pick, ex-Mastercard CEO Ajay Banga, is all set to head the World Bank.
Banga has already launched a ‘charm offensive’ before the nomination process ends, to convince all stakeholders that he is the right man for the job – to jumpstart the 77-year-old institution’s overhaul.
Adriana Kugler, the Senateconfirmed US Executive Director at the World Bank, hosted an informal ‘meet and greet’ for Banga, where he and other EDs discussed “efficiency, effectiveness, and the impact of the bank’s work,” a source said.
The Directors appreciated Banga’s management and leadership experience, and his willingness to engage openly, the source added.
US Treasury Secretary Janet Yellen said she was pleased so far with the positive reviews for Banga from the Group of 20 Finance officials. He has won praise for his work transforming Mastercard and lifting people in developing countries out of poverty.
As the World Bank’s largest shareholder with 16.35 per cent of its voting power, the US wields strong influence over the bank’s policies, and the lender’s President works closely with the Treasury Department.
Leave a Reply