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World Bank Group President Ajay Banga listens during the G-20 Finance Ministers and Central Bank Governors' Meetings at the IMF and World Bank’s 2024 annual Spring Meetings in Washington, U.S., April 18, 2024.
The big challenges facing the IMF and World Bank
As the International Monetary Fund and World Bank spring meetings wrap up Friday in Washington, the two crucial global lenders face a few important challenges in the year ahead. GZERO has been on the ground to bring you the big takeaways.
A tale of two recoveries. The IMF’s global economic outlook is fairly rosy as a whole. Inflation is easing in the US and Europe, and 3.2% growth of global GDP is a respectable clip – especially given recent fears of a recession. The US and Chinese economies are both growing, even if Beijing is still struggling with persistent debt and property market woes.
But the recovery has yet to reach every corner of the globe. One-third of the lowest-income countries are poorer today than in 2019, before the pandemic. And because inflation has pushed up interest rates, the costs of servicing sovereign debt have skyrocketed, an especially heavy burden for lower-income countries. Bringing financial stability to these fragile situations is a key focus for the IMF and the World Bank.
Power up. The World Bank announced it is launching a massive $35 billion plan to connect 300 million people in Africa to electricity. It’s the kind of fundamental development work the World Bank excels at, and it will help put the continent on track to drive an increasing share of global growth in the coming decades.
But many of the African students who might benefit from lightbulbs to study by also lack access to basic medical care – in fact, more than half the population of the globe finds themselves shut out of formal healthcare, and another two billion struggle to afford it. The World Bank plans to bring quality care to some 1.5 billion people and bolster public health systems to create sustainable improvements.
A new approach. World Bank President Ajay Banga stepped into a delicate situation succeeding David Malpass, who courted controversy with his skepticism about climate change. Banga is the first president in over a decade coming in from the private sector and he's attempting to streamline processes and make the institution more agile and flexible, which may include merging the Bank’s keystone conferences into one.
We’ll keep you up to date on progress during the Annual Meetings this fall.
For more on the big takeaways from this year’s conference, watch Senior Writer Matthew Kendrick’s interview with Tony Maciulishere.
David Malpass' advice to World Bank successor: time is short
In his final interview as president of the World Bank Group, David Malpass spoke with Ian Bremmer on GZERO World to reflect on his time leading the global development organization and to share his advice for his successor, Ajay Banga.
Malpass became president of the World Bank in 2019 and has seen the world change significantly during his term. He says he’s proud of how the bank handled major global challenges like the COVID-19 pandemic, the war in Ukraine, and the Afghanistan evacuation. He also thinks the bank did a good job raising the alarm about an impending economic crisis: slow growth and skyrocketing global debt.
“We had a core vision that we want people in developing countries to have better lives tomorrow than today,” Malpass says.
When it comes to the insight he’d offer to the next World Bank president, Malpass has three simple words of advice: time is short.
Malpass stresses that now is the moment to really rethink fiscal and monetary policy to create a more equitable global economy, one where all the capital isn’t flowing to a centralized point. According to Malpass, part of the job of the World Bank president is to have tough conversations about the major challenges in the world, like debt and climate, to get advanced economies to take action.
“Who’s going to stand up to the advanced economies and say, ‘You’re taking all the money so there’s not enough left for the rest of the 6 billion people in the world?’”
Watch the episode of GZERO World with Ian Bremmer: World Bank's David Malpass on global debt & economic inequality
World Bank's David Malpass on global debt & economic inequality
The world has a huge debt problem. Economic growth is slowing, but global debt is skyrocketing.
David Malpass sits down with Ian Bremmer on GZERO World for his final interview as president of the World Bank Group to discuss the debt crisis, his tenure at the World Bank, and solutions for combatting growing economic inequality.
Global debt has ballooned in the last two decades to an eye-watering $300 trillion due to years of low interest rates and cheap goods that made money easy to borrow. Then, along came the pandemic which stalled growth and a war in Ukraine that shot up food and energy prices, leading to runaway global inflation.
Rich countries reacted by injecting trillions of dollars of stimulus money into their economies, borrowing huge sums in order to do so.
"So much more of the world's capital is going just to pay off the debt of the advanced economies," Malpass warns, "That leaves less for everybody else, and I think that's a grave concern."
Malpass also spoke about China's emergence in the 21st century as the world's creditor, his proudest accomplishments as World Bank president, and advice for his successor, Ajay Banga. He also points to countries like India and Indonesia, which he believes are poised for significant economic expansion.
Can the world solve the global debt crisis before it's too late? Watch this full interview with David Malpass on GZERO World with Ian Bremmer.
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