New India-born World Bank chief: Actual change or rebranding?

BENGALURU, India (AP) — The incoming president of the World Bank was born in India and cast his early enterprise success there, a truth supporters say provides Ajay Banga useful perception into the challenges confronted by the growing international locations the financial institution is meant to assist.

But not everybody is certain that Banga, who has spent many of the final twenty years within the U.S. company world, might be counted on to shake up the financial institution in the way in which some assume it must be.

U.S. Treasury Secretary Janet Yellen talked up Banga’s credentials this week on the sidelines of the World Bank and International Monetary Fund’s spring conferences in Washington. Banga, at the moment vice chairman at non-public fairness agency General Atlantic, has greater than 30 years of enterprise expertise, together with as CEO of Mastercard and on the boards of the American Red Cross, Kraft Foods and Dow Inc.

“He has the right leadership and management skills, background, and financial expertise to lead the World Bank at a critical moment in its history,” Yellen mentioned.

That got here after President Biden, in nominating Banga in February, heralded his “critical experience” coping with pressing world challenges like local weather change, regardless that his resume exhibits little to do with local weather credentials.

The World Bank — the world’s largest and oldest growth financial institution — consists of 189 member international locations with a mission to scale back poverty and construct prosperity within the growing world. The risk of local weather change is a significant focus, with the financial institution billing itself as the biggest financier of local weather motion in growing international locations.

But leaders and activists from poorer nations, particularly these weak to the acute climate made worse by local weather change, have referred to as for large reforms in your entire multinational growth financial institution system. Led by Barbados Prime Minister Mia Mottley and embraced by French President Emmanuel Macron, they’ve pushed one thing referred to as the Bridgetown Initiative, which might make it simpler and sooner for growing international locations hit by climate disasters to get cash with decrease rates of interest for each restoration and for constructing to be extra resilient.

Banga will change David Malpass, a Donald Trump appointee who introduced he would step down this June, a 12 months early, after coming underneath strain for declining to say whether or not he agreed with scientific consensus on local weather change.

Climate finance analysts are relieved that Banga a minimum of believes local weather change is attributable to fossil fuels. But many are skeptical that his expertise — which incorporates stints at Nestle, Pizza Hut and Mastercard — is a pure match for local weather finance. And whereas he comes from a climate-stressed state in India, a nation that’s concurrently battling rising vitality calls for and local weather change results, his lengthy profession in America provides to their wait-and-see angle.

Anit Mukherjee, a senior fellow on the Observer Research Foundation America, a assume tank dedicated to India’s international growth, referred to as Banga’s ascension “a proud moment for India.”

“Growing up in India, Banga will likely understand the issues developing countries face. It is also clear he understands markets around the world,” mentioned Mukherjee, who has labored intently on reforming multilateral growth banks. “Whether he will understand the challenges of climate financing and development is still unclear.”

Harjeet Singh, head of worldwide political technique at Climate Action Network International, referred to as Malpass’s departure a historic alternative to “change the system.” But Banga is simply outdated wine in a brand new bottle, Singh mentioned.

“He has worked in corporations whose prime motive is profit. When it comes to development, especially climate change, it is about justice and equity,” mentioned Singh. Banga’s background “doesn’t inspire confidence,” he mentioned.

“We are facing multiple crises including climate change, the debt crisis, and the banking crisis. We cannot continue with the same systems that are responsible for these crises,” mentioned Singh.

Luiz Vieria, coordinator of the Bretton Woods Project, which watchdogs the World Bank and the International Monetary Fund, lamented as unfair the custom by which the U.S. usually appoints the World Bank head and Europe appoints the IMF head. Banga “doesn’t even meet the bare bones criteria,” he mentioned.

The son of an Indian military officer, Banga was born in 1959 and educated in a few of India’s premier establishments. When India’s financial system liberalized within the early ‘90s, Banga was capable of work and rise via the ranks of multinational companies breaking into India.

Since transferring to the U.S. within the early 2000s, Banga has held prestigious positions within the company world, together with heading Mastercard and serving as director of Exor and Temasek, giant holding corporations whose portfolios are various and embrace media corporations equivalent to Mediacorp and the Economist in addition to car corporations like Ferrari.

“Appointing someone like Banga is a great way to open the conversation with developing countries,” mentioned Suranjali Tandon, an assistant professor on the National Institute of Public Finance and Policy, a analysis institute affiliated to the Indian authorities.

But Tandon questioned whether or not Banga will probably be ready or keen to drastically change how the World Bank works.

“His private sector experience makes him well versed with taking high risks and getting high returns,” she mentioned.

“Development finance, especially climate finance though, is about high risk and low return investments. Given this, I don’t see the World Bank radically transforming under his leadership.”

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Fatima Hussein and Seth Borenstein in Washington, D.C., contributed to this report.

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