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Speaker 1: Let us turn to the G twenty. Finance ministers and

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Speaker 1: central bank governors are discussing food prices, energy security, debt

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Speaker 1: distress at their meeting in India this week. Inflation is

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Speaker 1: another key thing, with global policymakers increasingly diverging on their

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Speaker 1: approach to the issue and reporting divergence inflation statistics. Perhaps

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Speaker 1: Grimberg's America dooci joins us is at the summits and

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Speaker 1: is joined by a guest, Menka.

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Speaker 2: Amongst the many points that you raised, one of the

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Speaker 2: key issues under consideration at the G twenty is the

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Speaker 2: reform of multilateral development banks. And are having with me

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Speaker 2: the President of the World Bank, A Jabanga, to talk

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Speaker 2: just about the progress that all MDBs, but specifically the

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Speaker 2: World Bank has made on that part. Mister Bungals gets

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Speaker 2: straight to the two key issues that you raised in

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Speaker 2: your speech earlier this morning, and that has to do

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Speaker 2: with expanding the financing capacity of the World Bank. And

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Speaker 2: you said this progress that's been made on two recommended

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Speaker 2: measures in several reports. One is a portfolio guarantee mechanism.

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Speaker 2: Can you share would ask the mechanics of this the

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Speaker 2: kind of money it could unlock.

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Speaker 3: So I don't yet know how much money it will unlock,

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Speaker 3: because it depends how much people are willing to put

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Speaker 3: into it. But the idea is in this part of

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Speaker 3: the whole evolution roadmap was to find a way to

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Speaker 3: sweat the balance sheets of the capital that had already

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Speaker 3: been given to the bank so that shareholders could say

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Speaker 3: that their capital is being used to the fullest extent possible.

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Speaker 4: So one of the ways to do that, it was.

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Speaker 3: Already announced in the Spring meetings, which was to reduce

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Speaker 3: the loan to equity ratio from twenty to nineteen percent.

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Speaker 3: That tends to unlock somewhere between thirty and forty billion

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Speaker 3: dollars of lending over a.

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Speaker 4: Decade, maybe a little higher.

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Speaker 3: The portfolio guarantee scheme is the next idea, and the

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Speaker 3: idea here is, let's say I've got a portfolio of lending,

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Speaker 3: either in a particular vertical type of lending or in

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Speaker 3: some country, and sovereign countries are willing to say, I

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Speaker 3: will guarantee the repayment of that portfolio, and so I'll

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Speaker 3: take that off your risk, effectively of freeing up that

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Speaker 3: much lending capacity for me to go into the next

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Speaker 3: project in a law or income country or in a

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Speaker 3: country that you cannot afford the financing themselves.

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Speaker 4: That can tend to unlock.

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Speaker 3: For every billion dollars of portfolio guarantees that sovereigns give me,

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Speaker 3: I can lend another six to seven over the cost

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Speaker 3: of ten years. So I imagine if I get five

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Speaker 3: billion dollars of portfolio guarantees, you're talking about thirty to

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Speaker 3: forty billion dollars of lending capacity over a decade.

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Speaker 2: If I understand this correctly, is to work around the

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Speaker 2: fact that many of your shareholders at this point in

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Speaker 2: time are reluctant to put more money on the table.

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Speaker 2: A guarantee does not require you to put capital upfront.

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Speaker 3: Yes, So the real issue is so they're willing to

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Speaker 3: take risks in the system, but you're able to get

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Speaker 3: capital out front.

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Speaker 4: They have to go through legislative processes.

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Speaker 3: And the reality of the world today, I mean debt

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Speaker 3: issues and economic issues affect everybody.

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Speaker 4: The world's just recovering from the pandemic.

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Speaker 3: Fiscal headroom in the world, even in the developed world,

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Speaker 3: is constricted. So this is a way to find a

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Speaker 3: route around.

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Speaker 2: The other second instrument that you spoke of is a

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Speaker 2: hybrid capital instrument against same question, same much money late unlock.

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Speaker 4: There's the same idea of getting around and.

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Speaker 2: Doesn't involve or crowding private sector this you can.

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Speaker 3: So this is basically the idea is a debt issue,

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Speaker 3: but the debt is treated like hybrid capital because of

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Speaker 3: the fact of where it's created in the risk hierarchy

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Speaker 3: of getting paid back.

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Speaker 4: It's subordinated only at a certain level. So what it

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Speaker 4: does is.

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Speaker 3: It allows for this rating agencies and others to treat

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Speaker 3: this hybrid capital like capital.

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Speaker 4: That's why the word hybrid.

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Speaker 3: Now they don't allow ten dollars to be treated as

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Speaker 3: ten dollars of capital.

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Speaker 4: There is a ratio they apply. But again, if you

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Speaker 4: gave me a dollar of hybrid capital, I.

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Speaker 3: Could free up six to seven billion dollars of lending

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Speaker 3: over the course of a decade. So it's the same

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Speaker 3: multiplier like a portfolio guarantee.

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Speaker 2: And it also results to some extent the conversations you've

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Speaker 2: been having with rating agencies. It does hold you allow

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Speaker 2: you to retain your topolay rate.

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Speaker 3: Absolutely absolutely, Okay, Now, all this conversation as we had,

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Speaker 3: so the question really is we've got these students, you know,

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Speaker 3: the loan to equity show the hybrid capital idea, the

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Speaker 3: idea of the portfolio guarantees. Now the issue is what

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Speaker 3: can the shareholders do in the bank to contribute to

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Speaker 3: these And then the next question will be where do

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Speaker 3: you get the private sector involved?

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Speaker 2: I was just going to ask you that why thank

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Speaker 2: you so much? Can you answer it as hard?

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Speaker 4: Sure? So the private capital can be used in two ways.

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Speaker 3: One way is to actually invest in projects and invest

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Speaker 3: in the things out the in developing areas, and.

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Speaker 4: I'll talk about that in a minute.

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Speaker 3: The specific part of it is can they contribute into

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Speaker 3: the bank.

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Speaker 4: And traditionally the way.

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Speaker 3: Private capital or donor capital is coming is through trust funds.

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Speaker 3: So the bank has something called the Global Public Goods Fund,

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Speaker 3: and the idea is to allow that to be opened

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Speaker 3: up to people to contribute to it so I can.

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Speaker 4: Get concessional capital from it.

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Speaker 3: So what I'm trying to lay out here is if

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Speaker 3: I give you money for constructing something that you need

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Speaker 3: for your society, but the money is basically priced at

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Speaker 3: market value, you may still take it from me for

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Speaker 3: two reasons.

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Speaker 4: One like a stam for good housekeeping.

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Speaker 3: And two I may be able to give you longer

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Speaker 3: ten or money thirty years and four years.

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Speaker 4: But when I really benefit.

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Speaker 3: You is when I can give it at a cheaper price,

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Speaker 3: all the way down to a free grant if you're

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Speaker 3: a country that cannot afford to pay anything for it.

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Speaker 3: And that's the scale of how you allocate this money out.

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Speaker 3: That idea of concessional capital is key to unlocking the

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Speaker 3: pathway for development for many lower income countries, and essentially IDA,

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Speaker 3: which is the lower income lending out off the bank,

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Speaker 3: is designed to provide concessional capital, while IBRD is designed

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Speaker 3: to get closer to the market level. And then IFC

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Speaker 3: is private sector kind.

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Speaker 2: Of pricing, So who what kind of private entities are

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Speaker 2: you hoping will participate in this? What kind of amounts

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Speaker 2: are we even talking about?

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Speaker 3: Seranthropies and private companies both will be able to if

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Speaker 3: they wish to.

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Speaker 2: And have you scoped out what kind of money is

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Speaker 2: potentially Because.

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Speaker 3: This is the early days in my six weeks, I

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Speaker 3: haven't had a chance to figure that out, but I

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Speaker 3: will say, you know, look at India, India, this is brilliant.

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Speaker 4: Two percent of corporate profits to be given to CSR.

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Speaker 3: That's right, What's that we're allowed to be funding these

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Speaker 3: kinds of things? For investing in India that could open

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Speaker 3: up a completely different thing. Now that's it policy issue.

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Speaker 3: I can't be the one deciding it. It's for India

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Speaker 3: to decide. And I don't mean this to be putting

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Speaker 3: pressure in India because in reality other countries could do

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Speaker 3: this too.

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Speaker 4: Instead of raising.

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Speaker 3: Corporate taxes another country, why don't you say that the

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Speaker 3: money could be best used to transform a global public

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Speaker 3: good that matters to you. It could be climate, it

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Speaker 3: could be food insecurity. It could be you know, getting

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Speaker 3: heat resistant varieties of seeds for the changing climate. It

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Speaker 3: could be what works for you. It's just worth thinking

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Speaker 3: through whether we are looking at all the avenues to

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Speaker 3: unlock capital creatively to make a difference.

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Speaker 2: And this speaks to your broad mission for the World Bank.

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Speaker 2: But since we're here at the G twenty, let me

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Speaker 2: ask you one quick question about the G twenty as

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Speaker 2: well before I run out of time with you. Where

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Speaker 2: are we on the conress regarding resolution of debt for

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Speaker 2: low and middle income countries, but specifically low income countries

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Speaker 2: the Zambia resolution. Does it set a precedent? Do we

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Speaker 2: know what China finally agreed to and whether it will

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Speaker 2: keep coming back to the negotiating table for other countries

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Speaker 2: as well well.

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Speaker 3: I think that what China did was it did cooperate

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Speaker 3: on Zambia. At the end of the day, these sovereign

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Speaker 3: debt round tables at the Imfilm wallpank Ad under the

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Speaker 3: G twenty Common Framework did bring a resolution for Zambia

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Speaker 3: just while we were in Paris the other day. This

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Speaker 3: hard work that happens behind the scenes. It's a bit

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Speaker 3: like a dark on water, you know, you don't really

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Speaker 3: see the feet flapping. The next important ones are in

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Speaker 3: Theopia Ghana and eventually we got to work, and that's

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Speaker 3: the question.

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Speaker 2: We'll China come back to the table for that.

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Speaker 3: I think they're going to engage whether the model you

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Speaker 3: asked the question earlier, is this a precedent. I wouldn't

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Speaker 3: use the word precedent because the circumstances of these countries

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Speaker 3: are different. There may be a model that you can

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Speaker 3: use in terms of how we approach it, and I

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Speaker 3: don't think you can create a pre students. Each country

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Speaker 3: has a different mix of debt and a different circumstance around.

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Speaker 4: Bilateral debt versus commercial debt.

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Speaker 3: I think you've got to be careful about just hoping

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Speaker 3: that somehow this is a spreadsheet that will now just

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Speaker 3: roll out.

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Speaker 4: I don't think that's.

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Speaker 2: Out, little mister Banga. Thank you for speaking with us

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Speaker 2: right now, I'm going to hand it back to Anna

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Speaker 1: Inspect you Menka, thank you very much being Bag's Mankadoshi

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Speaker 1: out the G twenty summers in India