Ajay Banga, president of the World Bank Group, during an interview at Bloomberg House on day three of the World Economic Forum (WEF) in Davos, Switzerland, on Thursday, Jan. 18, 2024. The annual Davos gathering of political leaders, top executives and celebrities runs from January 15 to 19. Photographer: Chris Ratcliffe/Bloomberg
WASHINGTON: The leaders of the World Bank and International Monetary Fund (IMF) are seeking to mend fences between their sister institutions after tensions arose in recent years over issues including climate change and sovereign debt issues.
Ajay Banga, who took over as World Bank president last June, met last week with the IMF executive board, made up of 24 executive directors who represent its 190 member countries, according to an IMF spokesman.
It’s the first time that a chief of the anti-poverty institution has met with those top officials of the world’s lender of last resort in more than five years.
It’s part of an effort to move past some bad blood dating to the tenure of Banga’s predecessor, David Malpass.
The Trump appointee was criticised for not sufficiently focusing on environmental issues, while IMF managing director Kristalina Georgieva moved the fund toward addressing climate issues.
An IMF spokesman said in a statement that Banga’s “informal courtesy visit to the IMF Executive Board was for him to outline his vision for the World Bank Group and the importance of continued close collaboration between the fund and the bank, and not in a response to anything else.”
The World Bank declined to comment.
Banga and Georgieva said in a joint statement early last September that they plan to enhance collaboration – “in particular with regards to climate change, renewed high debt vulnerabilities, and digital transition.”
Banga and Georgieva also meet for breakfast or lunch about once a month to discuss shared priorities, according to a person familiar with their discussions, who asked not to be identified discussing private interactions.
Georgieva, an environmental economist, took the top at the IMF job in 2019 after serving as the World Bank’s number two official and running it for several months before Malpass was appointed.
Under her, the IMF has begun granting longer-term loans to help nations adapt to climate change, traditionally the purview of the World Bank.
That sparked resentment among some at the World Bank, which environmental groups criticised as being disinterested in the issue under Malpass.
Meanwhile, Malpass, who in the Trump administration had a reputation as a China hawk, was more vocal than Georgieva in calling for Beijing to provide debt relief to struggling nations during the Covid-19 pandemic.
That stirred some unease at the IMF, whose traditional focus is on balance of payments lending and debt.
Tensions were further stoked in late 2021 after the World Bank under Malpass’s leadership released a report that characterised Georgieva as trying to improperly boost China’s ranking in a survey of business climates during her time at the bank.
That led the IMF board to consider removing her, although it determined the report didn’t “conclusively demonstrate” wrongdoing.
Last week’s IMF board meeting with Banga, at the IMF headquarters across the street from the World Bank in Washington, lasted about 90 minutes and was focused on how the institutions can create incentives for greater collaboration between their staffs, which varies between countries and offices around the world, according to people familiar with the meeting, who asked not to be identified because it was private.
The visit ended with a pledge to maintain stepped-up interactions, they said.
The World Bank’s roughly 16,000 staff are largely focused on project finance, while the IMF’s approximately 3,000 employees, mostly economists, are more focused on balance of payments lending.
Malpass stepped down last year, almost a year before the end of his term to “pursue new challenges”.
The Biden administration appointed Banga to replace Malpass and has signalled that it now wants to see the IMF refocus on its core mission of macroeconomic and exchange-rate surveillance and guidance, and leave climate expertise to the World Bank and others. — Bloomberg
