The Private Sector Investment Lab being set up by the World Bank will help ease the “friction” in attracting private capital to emerging economies, World Bank president Ajay Banga said on Monday. Speaking on the sidelines of the G20 meeting of finance ministers and central bank governors here, Banga said the bank is reorienting itself to play a stronger role in the global efforts for poverty eradication and all-round development. He also indicated that the plan under way to bolster the bank’s capital base will be expedited. Banga’s comments come in the wake of the G20 finance ministers considering a report on Capital Adequacy Framework of multilateral development banks, which was submitted to them in July last year. The idea is to unlock hundreds of billion dollars of additional lending headroom for MDBs, without undermining their financial stability or credit rating.
What are your priorities as president of the World Bank?
In the first six weeks, what I have focused on is the evolution road map (G20 Common Framework), which is going to be the new vision and mission to eradicate poverty and make the planet more liveable. This expands to include (tackling) pandemics and climate change, food insecurity and financial fragility. Then, the second important aspect is the capital adequacy framework, which is how we can buttress the balance sheet.
The third part is to let the bank work quicker and faster. Once we’ve done all that, we can go back to the big shareholders and tell them why we need a bigger bank given the many challenges before us. You cannot (meet the capital needs of MDBs) by relying only on government money. We need to have the multilateral banks grow bigger. But we also need the private sector (for development finance).
What is your assessment of the Indian economy?
I’m more optimistic about Indian economy today than I’ve been in 30 years. The fact is that the world economy is in a difficult place right now. It has outperformed what everybody has thought, but it doesn’t mean that there won’t be more challenges. The IMF and World Bank forecasts are that the world will get a little challenging over the next year or so. But the forecasts are not (cast in stone).
What is the bank doing to attract private investments to emerging market economies?
There’s no easy answer (to the slump in private investments). What I’m trying to do is to set up a Private Sector Investment Lab, which is headed by Mark Carney (UN Special Envoy on Climate Action and Finance and Co-Chair of GFAN) and Shriti Vadera (Chair of Prudential). As many as 15 CEOs have agreed to become a part of that. They will meet us every month, and give us ideas to help reduce the friction for the private sector to invest in emerging markets.