The bank funds projects in developing countries through a mix of grants and concessional loans that countries pay back. Last year it provided A$136 billion to 75 nations in grants and loans.
Through this work 36 countries have graduated from least developed to middle income status, and many, like South Korea, have now become donors themselves.
That means a big part of the World Bank president’s job is securing funding. The International Development Agency fund is currently in a three-yearly “replenishment” round where it seeks contributions from donor countries.
If it can convince donors to reach this figure, it can leverage this into a A$149.9 billion fund by using its AAA credit rating to borrow further in international capital markets .
Why Australia’s role is important
From the bank’s perspective, Australia plays a significant role. It is a particularly important donor in the Pacific, for example, donating money for a fund which has contributed to a 50% increase in the World Bank’s Pacific-based staff and a seven-fold increase in its projects in the region.
This supports more than 95 projects on agriculture, digital development, education, fisheries, health, renewable energy, transport and employment.
The World Bank provided A$136 billion in grants and loans to 75 countries last year. Agent Wolf/Shutterstock
Compared to other countries, Australia gives a relatively low proportion of its development funding through multilateral bodies like the World Bank – directing more of its funding through bilateral channels.
The World Bank needs a coalition of countries including Australia to make big pledges to fund the bank’s work.
Who is Ajay Banga?
Banga is not your typical appointment, having being born and grown up in a developing country and taking on the presidency which is traditionally held by an American. He is an American citizen.
He comes from business, having previously been president and CEO of Mastercard, as well as roles with PepsiCo, Citigroup and Nestlé in India. He was chairman of the International Chamber of Commerce.
He is known for his work at Mastercard launching the Centre for Inclusive Growth, which advances equitable and sustainable economic growth and financial inclusion around the world.
He also stands out compared to his predecessor on climate change. He added the words “on a livable planet” to the World Bank’s mission.
With this background – and access to all the World Bank’s facts and figures – he has a sense of the lived reality of people’s lives and the gravest dangers to this planet.
Banga’s top priorities
This week the president said “ jobs ” was his top priority.
In little more than a decade, 1.2 billion young people worldwide will be of job-seeking age, according to figures he presented to think tank, the Lowy Institute . With current forecasts of 400-500 million jobs likely to be created, there’s a huge gap.
That means there’s an urgent need to create jobs so these young people don’t become a migration, drugs or conflict problem.
Banga said we need “governments, philanthropies and multilateral development banks working together” to produce more jobs.
It’s a reminder why it is so important for a developed country like Australia to invest in development aid to create a stable, prosperous region and wider world.
Dealing with global poverty is preventive. It’s cheaper and easier to invest in electricity, health care and education now than with the costs of instability or chaos later.
The good news is the world’s investments in development have led to a sharp reduction in global poverty since 1981 . Banga’s message to Australia is
Ultimately the World Bank is an instrument that reflects the ambition of those on whose generosity it relies, and the progress we aspire to achieve demands more.
Melissa Conley Tyler is Executive Director at the Asia-Pacific Development, Diplomacy & Defence Dialogue (AP4D), an initiative funded by the foreign affairs and defence portfolios and hosted by the Australian Council for International Development. She met with Ajay Banda as part of his visit.
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