G20: World Bank must amend vision to look beyond poverty, says President Ajay Banga

Banga took charge as the President of World Bank in early June.

The World Bank must make changes to its vision so that it can look at issues beyond poverty, President Ajay Banga has said.

Speaking on July 16 ahead of the third meeting of the G20 Finance Ministers and Central Bank Governors in Gandhinagar, Banga said he was worried by the narrow definition of poverty.

"I have been six weeks in this job and I think what I am concerned about is that the definition of trying to eradicate poverty is inadequate without including challenges like climate change, pandemics, fragility, food insecurity – these are intertwined crises," Banga, who took charge as the President of the World Bank in early June, said.

"So when we talk about developing cities that are inclusive and useful for people to live in, we have to remember that it has become much more complicated because of the nature of the intertwined crises that our world is currently living through. What I am trying to say is that the World Bank should amend its vision to go from just being poverty-focused to saying 'Yes, we want to create a world that is free of poverty but we have to be on a liveable planet'… That's kind of critical," he added.

Banga, who was delivering his remarks as part of an infrastructure investors' dialogue, said it was key to find sources of large capital which is needed to provide new infrastructure and services for new cities and upgrade ageing infrastructure in existing ones.

"We need to bolster these lagging private sector flows. We have all been talking about private capital flows that should somehow flow miraculously into all these places. We haven't done a very good job," Banga rued.

In this context, the World Bank President said the future of cities, including Indian ones, was municipal financing as they were "very credit worthy". However, as they were lacking in various aspects – lack of data to represent credit-worthiness of cities, inability to produce bankable projects, lack of credit analysis – they needed assistance either in the shape of first-loss guarantees or liquidity.

"But the reality is municipal financing is the answer for India to progress its cities and I know that Madam FM (Finance Minister Nirmala Sitharaman) understands this better than almost anyone in what she trying to build and deal with," Banga added.

Banga also said it was crucial to not keep tinkering with the design of project financing as the private sector required predictability to permit scaling.

"Once we know something works, it strikes me as very obvious that we should be scaling and replicating what works as many times as possible. Yet I struggle with why we keep trying to redefine and redesign the wheel for each new project. It's almost as though the intellectual exercise of designing a financing methodology for the next project is more important than actually getting to the scale of building many more projects," Banga said.

"We need to find sensible ways to replicate and scale because there's nothing the private sector likes more than replicating and scaling what works," he added.