"We are reaching the limit", warned Ajay Banga, in his intervention at the plenary session of the Annual Meetings of the International Monetary Fund (IMF) and the World Bank, taking place this week in Marrakesh, stressing that "no amount of creative financial engineering will compensate for the fact that more funding is needed."
Specifically, the president of the World Bank pointed out that "economic growth in developing countries is declining, from 6 to 5 percent in two decades, and on track to just 4 percent in the next seven years."
Each percentage point drop, he explained, equates to 100 million more people being pushed into poverty and 50 million more falling into extreme poverty.
"In addition to the numbers, we find people struggling to secure income for themselves and their families, which has stagnated; in sub-Saharan Africa, per capita income is the same as it was 14 years ago," he said, adding that "debt has risen in emerging markets , doubled in Africa, and threw countries to the ground, at a time when they were trying to get back on their feet", after the shocks of raw materials and covid-19, in addition to the effects of climate change.
The International Development Association, the concessional financing arm of the World Bank, was created in 1960 to provide low-interest loans and grants to the poorest countries and is the largest source of financing for the world's 75 poorest countries.
Donors meet every three years to replenish resources and in December 2021 they secured US$93 billion until 2025, but Banga said that as early as 2022 most of this capital has been mobilized to respond to needs, and hence the challenge for donors to be even more generous in the next funding cycle.
In the first major intervention since succeeding David Malpass in June, Ajay Banga said that humanity "faces a set of problems so complex and severe that it calls into question our very existence" and acknowledged that "there is growing distrust between the North and the global South, which complicates the prospect of success".
“The World Bank is merely an instrument that reflects the ambition of our shareholders; The progress we aspire to requires that our resources and our capital are commensurate with our vision and challenges", he concluded.
