Ajay Banga, President Biden’s nominee for the presidency of the World Bank, received approval from the bank’s executive board on Wednesday, marking a significant step toward expanding the institution’s efforts to combat climate change. With a wealth of experience in developing economies and financial expertise, Banga, a former CEO of Mastercard who hails from India, will assume the position on June 2, succeeding David Malpass, who was nominated by former President Donald J. Trump and has held the role for four years.
While the approval from the board’s 25 executive directors was not unanimous, with Russia abstaining, Banga emerged as the sole nominee despite Russia’s attempts to find an alternate candidate. Traditionally, the World Bank president is an American citizen chosen by the United States, whereas the European Union selects the managing director of the International Monetary Fund.
President Biden commended the board’s decision, expressing his confidence that Banga would guide the bank in effectively addressing challenges such as climate change, thereby enhancing its mission of poverty reduction. In a statement, Biden remarked, “Ajay Banga will be a transformative leader, bringing expertise, experience, and innovation to the position of World Bank president.”
Treasury Secretary Janet L. Yellen, an early advocate for Banga’s candidacy within the Biden administration, expects him to expand the bank’s reach by fostering new partnerships between governments and the private sector. Yellen anticipates a gradual implementation of reforms throughout the next year. She emphasized Banga’s understanding of the interconnected nature of the challenges faced, including climate change, pandemics, fragility, extreme poverty, and shared prosperity. Yellen stated, “He has effectively built a broad global coalition around his vision for the bank over the course of his candidacy.”
Banga assumes his role amid heightened expectations and pressing questions about potential changes to the bank’s lending model, increased shareholder funding, and strategies to address poverty, global warming, and the conflict in Ukraine. Balancing the United States’ climate goals while prioritizing development will pose a diplomatic challenge, as will managing the complex relationship with China, a significant shareholder and creditor currently under pressure to assist indebted poor nations in restructuring their debts.
The leadership transition occurs during a tumultuous period for the global economy, marked by the pandemic, inflation, and warfare over the past three years. These converging crises have pushed millions into poverty and reversed decades of development progress.
Biden’s selection of Banga, announced in February, followed an extensive listening tour that took him to eight countries and involved numerous meetings with government officials worldwide. Russia’s decision to withhold support during the voting process highlights the friction caused by its actions in Ukraine within international institutions.
Officials from the Biden administration declined to disclose Russia’s voting stance but expressed confidence in Banga’s strong mandate and broad support as he assumes the presidency. Banga’s appointment is for a five-year term, succeeding his predecessor, Mr. Malpass, who announced his resignation earlier this year due to criticisms of his insufficient commitment to revamping the World Bank’s climate agenda.