President Joe Biden will nominate former Mastercard Inc. Chief Executive Officer Ajay Banga in a surprise pick to be the next president of the World Bank as Washington pushes the lender to expand its financial firepower and confront global issues such as climate change and public health.
(Bloomberg) — President Joe Biden will nominate former Mastercard Inc. Chief Executive Officer Ajay Banga in a surprise pick to be the next president of the World Bank as Washington pushes the lender to expand its financial firepower and confront global issues such as climate change and public health.
Banga “has spent more than three decades building and managing successful, global companies that create jobs and bring investment to developing economies, and guiding organizations through periods of fundamental change,” Biden said in a statement Thursday.
The 63-year-old currently serves as vice chairman at US investment firm General Atlantic LP. Before that, he spent a decade as president and CEO of Mastercard. He also held various positions at Citigroup Inc., including as CEO of the Asia-Pacific region.
While the official nomination process to replace current President David Malpass opened earlier Thursday — and the bank has signaled that the final selection may not come until early May — Washington’s candidate has traditionally taken the top spot at the World Bank, where the US is the largest shareholder. Malpass, who was nominated by President Donald Trump, last week unexpectedly announced that he plans to leave by the end of June.
The nomination comes at a time when the World Bank and its twin Bretton Woods institution — the International Monetary Fund — face growing demand for their assistance, with 60% of low-income nations at or near debt distress, and countries owe their creditors hundreds of billions of dollars. It also comes as Treasury Secretary Janet Yellen is pushing an evolution of the development lender from its traditional focus on country-specific lending to focus on global goods like fighting climate change and pandemics.
Raised in India, 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,” Biden said.
Yet he wasn’t among a list mentioned by analysts in recent days, which included Samantha Power, head of the US Agency for International Development; and Ngozi Okonjo-Iweala, the current head of the World Trade Organization, a dual Nigeria-US citizen. The World Bank board said Wednesday said that it would strongly encourage women nominees.
Banga’s nomination comes with Yellen in India for discussions among Group of 20 finance ministry and central bank leaders gathering this week in Bengaluru, India.
Regional Initiatives
Banga has co-led the Partnership for Central America, an initiative launched by Vice President Kamala Harris to marshal private-sector support for the region aimed at creating more economic activity and jobs, with contributions of more than $4.2 billion across about 50 companies and organizations.
The Biden administration is confident that Banga will have a strong commitment to gender equality and inclusion, and that his experience growing up and spending the early part of his career in India will help give him a global perspective, a senior administration official told reporters.
If appointed by the executive board, Banga would follow the early departure of David Malpass, who was tapped in 2019 by then-President Donald Trump and seen by critics as unfriendly to Biden and Yellen’s climate priorities.
The bank’s next president will be tasked with reforming the nearly 80 year-old institution, a process spurred along by a Group of 20 review released last year and promoted by Yellen.
Among other recommendations, the bank is urged to tackle global and transnational issues, particularly climate change, and expand its so-called capital adequacy, allowing it to share more funds and take on more risk, all while continuing its traditional role of poverty reduction and project finance.
Any effort, however, will need to be balanced against preserving the bank’s triple-A credit rating and preferred creditor status, which allows it to borrow cheaply and lend at below-market rates.
Malpass, whose term was set to run through April 2024, came under scrutiny in September after appearing to dodge questions over the man-made causes of climate change, raising calls for his replacement and for multilateral banks to stop funding fossil-fuel energy projects.
The selection of Banga “clearly signals a desire to focus on the financial model of the institution, and that there’s more to be exploited in terms of how much financing the World Bank can provide, on what terms,” said Scott Morris, a former US Treasury official now at the Center for Global Development. “This nomination suggests they really are serious about digging into the financial side.”
Treasury officials have signaled that while they want the bank to lend more, changes to use existing resources as efficiently as possible should be a prerequisite to any thinking about adding new resources to the bank.
The bank’s executive board said Wednesday that it will accept nominations through March 29, and then decide on a shortlist of up to three candidates and conduct formal interviews.
Yellen earlier this month called on the bank to implement changes by the time shareholders meet for its so-called Spring Meetings this April in Washington, and asked it to kick off a second phase of reforms by the time shareholders meet for its annual meetings in October.
Banga served as a member of President Barack Obama’s Commission on Enhancing National Cybersecurity, and is also a past member of the US President’s Advisory Committee for trade policy and negotiations.
–With assistance from Viktoria Dendrinou.
(Updates withcomment from analyst in 16th paragraph.)
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