WEBVTT - World Bank President Ajay Banga Talks Funding

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. What we saw yesterday

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<v Speaker 1>is a boost from private investment, from the likes of

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<v Speaker 1>Larry Frank of Blackrock. He was here at the G seven.

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<v Speaker 1>And what these in private investment funds are trying to

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<v Speaker 1>do is boost money going to the global South middle

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<v Speaker 1>income countries. And part of this is made possible by

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<v Speaker 1>programs at the World Bank. And I'm pleased to be

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<v Speaker 1>joined by Anji Banga, Thank you so much for joining us. John.

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<v Speaker 1>There was talking about a big emphasis, especially on Africa.

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<v Speaker 1>This is to try one counter China from the US

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<v Speaker 1>point of view, but also European leaders are trying to

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<v Speaker 1>stem the flow of migration. How are you seeing this

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<v Speaker 1>public private partnership play out?

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<v Speaker 2>And so I think Africa. The real situation is that

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<v Speaker 2>Africa is going to get better than a half people

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<v Speaker 2>going to two and frankly, how can you not have

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<v Speaker 2>a continent of that contributing to future economic growth. That's

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<v Speaker 2>the other way of looking at why Africa And so

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<v Speaker 2>what I'm trying to talk about there is what creates

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<v Speaker 2>jobs for those young people. It's got a demographic dividend

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<v Speaker 2>coming through it. But if you don't give them clean air,

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<v Speaker 2>clean water, healthcare and education when they're growing up, and

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<v Speaker 2>jobs when they're older. We have a problem with that

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<v Speaker 2>demographic dividend becoming a liability. Can't do that only with

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<v Speaker 2>government money and multilateral money. That's why people like what

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<v Speaker 2>Laddier did yesterday Orsata was talking about, these are all

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<v Speaker 2>the ways to get private sector money as well to

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<v Speaker 2>come in at scale to help create the jobs in

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<v Speaker 2>that country.

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<v Speaker 1>How difficult are these conversations on the sideline of the

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<v Speaker 1>G seven when you see leaders here coming up wounded

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<v Speaker 1>by recent elections, mattered because what their electorate is focused

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<v Speaker 1>on is rising prices at home and immigration coming into

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<v Speaker 1>their country. And meanwhile you have leaders talking about investments

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<v Speaker 1>in other parts of the world and also what's going

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<v Speaker 1>on of course with the war in Ukraine.

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<v Speaker 2>Yeah, but if you're discussing private sector investing, this is

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<v Speaker 2>actually good for these leaders because it's a way to

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<v Speaker 2>enhance every dollar that governments and multilateral institutions put in

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<v Speaker 2>to add a little more and that's very, very helpful

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<v Speaker 2>to them. So it just depends how you approach this discussion.

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<v Speaker 2>My way of approaching it is it's not all about

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<v Speaker 2>the money you give. One on one bilaterally, it's about

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<v Speaker 2>the leverage you get. So for example, if you give

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<v Speaker 2>the World Bank money into what we call IDA, which

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<v Speaker 2>is the institution that provides grants and concessional financing to

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<v Speaker 2>the poorer countries, a lot of which are currently in Africa. Unfortunately,

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<v Speaker 2>that gets the leverage. Every dollar you give me as

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<v Speaker 2>a country as capital, I can make it four times.

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<v Speaker 2>So leaders know that too, and then if you bring

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<v Speaker 2>in the private sector, that four can become eight and ten.

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<v Speaker 2>So people are thinking about how to get a dollar

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<v Speaker 2>to go to ten, not just a dollar for a dollar,

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<v Speaker 2>And I think that makes for a good consation.

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<v Speaker 1>But it's multilateralism harder, which I know you're a big

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<v Speaker 1>believer in. When you see the rise of nationalism.

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<v Speaker 2>Oh yeah, sure. I've been saying for years when I

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<v Speaker 2>was in my old job private sector that a lot

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<v Speaker 2>of the biggest things that buries me you chauvinistic nationalism,

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<v Speaker 2>because it tends to create the absence of connectivity. But

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<v Speaker 2>I think if you look at the last few months itself,

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<v Speaker 2>we've managed to get capital and hybrid capital and portfolio

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<v Speaker 2>guarantees into our institution and we are the one that's

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<v Speaker 2>working with this multilateralism. So let me give you an example.

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<v Speaker 2>People keep asking me about the debt crisis in Africa, right,

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<v Speaker 2>and if you think about the four countries from Africa

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<v Speaker 2>that entered the G twenty Common Framework, Zambdir, Chad, Ethiopia,

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<v Speaker 2>and Ghana. From the time they entered, we in the

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<v Speaker 2>Bank have given them sixteen billion dollars of money. Nobody

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<v Speaker 2>else has given them money. Of that, sixteen eight was

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<v Speaker 2>concessional and eight was pure grants off. That sixteen nine

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<v Speaker 2>was net positive. So that's all multilateralism at work. People

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<v Speaker 2>just talk about one part of it. But multilateralism does

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<v Speaker 2>work with the leverage that institutions like the Bank provide.

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<v Speaker 1>We of course have a US election coming up, and

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<v Speaker 1>part of what you've wanted to expand and your approach

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<v Speaker 1>to the World Bank is not just poverty, but also climate.

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<v Speaker 1>Do you think that would be at risk if we

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<v Speaker 1>were to see a Trump presidency.

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<v Speaker 2>Not really. I remember that during his prior presidency he

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<v Speaker 2>was one of those who actually gave the capital increase

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<v Speaker 2>to the World Bank. He sees the value of this

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<v Speaker 2>leverage and the value value of this kind of institution.

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<v Speaker 2>Just to be clear, when I talked about a Liverpool Planet.

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<v Speaker 2>I want to make sure you know it's not just climate,

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<v Speaker 2>it's fragility, conflict, violence, it's things like pandemics and healthcare.

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<v Speaker 2>Because the whole idea of Liverpool Planet allows you to

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<v Speaker 2>expand the aperture depending on what's relevant in that country,

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<v Speaker 2>that region. In some cases it is climate. In some

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<v Speaker 2>cases it's fragility conflict that is driving things. In others

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<v Speaker 2>it is climate that is driving the fragility and conflict.

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<v Speaker 2>You have to get to the root cause and try

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<v Speaker 2>and go at it.

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<v Speaker 1>Well. There be more pressure, you think, whether or not

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<v Speaker 1>it's Trump or Biden, potentially to figure out what's going

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<v Speaker 1>on with China. They're the biggest bilateral credit and many

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<v Speaker 1>say that what they are doing in a lot of

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<v Speaker 1>these countries is called a debt trap.

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<v Speaker 2>Yeah. Interesting, So I think where they are today it's

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<v Speaker 2>quite different from what it probably was some years ago.

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<v Speaker 2>All the conversations we've had, the G twenty count framework

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<v Speaker 2>and the IMF in the World Bank run something called

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<v Speaker 2>this Global Debt Sustainability around table, and in that everybody

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<v Speaker 2>comes the multilateral So are there as the bilateral creditors,

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<v Speaker 2>the private sector creditors, of which there is a very

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<v Speaker 2>large amount, and then the so called earlier ones the

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<v Speaker 2>Paris Club. What's really changed is it's not just bilateral

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<v Speaker 2>credit that's an issue. It's also the private sector that

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<v Speaker 2>is involved in lending. So today, if you want to

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<v Speaker 2>do a debt restructuring for these countries, you have to

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<v Speaker 2>first know who's put what money on the table, what's

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<v Speaker 2>it costs, what's the covenants of its repayment, what's the

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<v Speaker 2>whole thing in it. Get that data on a sheet.

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<v Speaker 2>Without that very hard to know how to adjust that

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<v Speaker 2>money in. So that took time. But as you see

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<v Speaker 2>it getting done and you can begin to see countries

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<v Speaker 2>moving through the framework, I still think it's too slow.

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<v Speaker 2>I think it should be faster because if you make

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<v Speaker 2>it faster, more countries will feel emboldened to enter into

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<v Speaker 2>the framework. And I think we need to work our

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<v Speaker 2>way through this.

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<v Speaker 1>What you're offering, do you see as a viable path

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<v Speaker 1>for these countries instead of say, turning to China.

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<v Speaker 2>Oh yes, I think it's not either or by just China.

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<v Speaker 2>People are borrowing money from India, they're borrowing money from

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<v Speaker 2>the UN, United States, they're borrowing money from the UK.

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<v Speaker 2>Remember this bilateral creditors have been around for a long time.

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<v Speaker 2>It may be called oda in some cases maybe actual

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<v Speaker 2>lending through some countries. People there are countries borrowing bilaterally

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<v Speaker 2>as well. I don't think it's in either all that

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<v Speaker 2>has to be either multilateral or bilateral. I just think

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<v Speaker 2>it has to be done in a fair way, a

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<v Speaker 2>transparent way, in a way that we can all understand

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<v Speaker 2>what's going on, and then do it in a way

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<v Speaker 2>that the countries who are borrowing also don't use only

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<v Speaker 2>the borrowing as the resource, but also spend efforts on

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<v Speaker 2>domestic resource mobilization, doing other things that enable them to

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<v Speaker 2>free up the resources to do the right thing to development.

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<v Speaker 1>Aj Banga, thank you so much for your time.