Bangkok 2026: What We’re Watching at the World Bank/IMF Annual Meetings

[00:00:00] Adva Saldinger: Hello, everyone. My name is Adva Saldinger. I'm a senior reporter at Devex. I'm really looking forward to the conversation we're going to have today and getting the insights from a bunch of Center for Global Development experts on what we can expect next week at the World Bank and International Monetary Fund Annual Meetings, which this year are being held in Bangkok. I think that adds some interesting dynamics and maybe also makes some of the logistics a little bit more difficult for this year, especially as Bangkok has been dealing with some significant flooding. But I think that will also sort of paint a very clear picture of some of the climate impacts that countries are seeing as we sort of look to those conversations. And so joining me for this conversation to sort of share what they're looking ahead to next week are Rachel Glennerster, the President of CGD, Clemence Landers, who's the Vice President and Senior Fellow, Markus Goldstein, who's a Vice President and Senior Fellow, and Mikaela Gavas, who's the managing director of CGD Europe and also a Senior Fellow. And so thank you all for being with me today. I'm really looking forward to hearing more from each of you about sort of what you're watching and looking forward to next week, what you think the sort of key conversations will be and what the sticking points are. Rachel, I thought I would go to you first and see if you might sort of paint a picture for us a little bit and give us a sense of, you know, what is the backdrop that we come into with these meetings. Often there's a lot of sort of unsaid things or things that aren't on the official agenda, but that are really sort of coloring or framing a lot of the conversations that we'll be having.

[00:02:12] Rachel Glennerster: Yes. So, I mean, there's an economic backdrop, which is very much linked to a lot of politics. Now the IMF and World Bank try and stick out, stay out of politics, but, you know, the wars, the Strait of Hormuz, Yemen, Sudan, Ukraine are having big impacts on the world economy. So inevitably that politics intrudes into the economics, you know, and leading to higher food prices and higher oil and gas prices. It's interesting. Last time at the spring meetings, people were talking a lot about increase in food prices, but there wasn't much sign of that. Whereas now we've really seen, you know, 27% increase in soybean prices and a 37% increase in wheat prices. So that is going to feed through into tougher conditions in low and middle income countries. So I think people are going to be worrying about that. And obviously the oil and gas, you know, went crude up 53% in the last year. So that's part of the backdrop and leads into fiscal, challenging fiscal environments for a number of countries, including rich countries. So we've seen this big, you know, increase in yields in the US. And one question people will be thinking about is how much does that feed through into higher borrowing costs for low and middle income countries? And at the moment, you know, there's a bit of a divergence with richer countries seeing big increases in borrowing costs, but less so for low and middle income countries. It hasn't fed through yet. And then a big topic of conversation at the meetings will be artificial intelligence, as it is in every meeting and dinner and lunch I have. But it's the subject of the World Development Report, this time from the World Bank. So, you know, the curtain raiser speech from the head of the IMF was also talking about AI. So that's, you know, how all the countries in the world can benefit from AI, I think is going to be a big, big topic of conversation and an important backdrop.

[00:04:43] Adva Saldinger: Absolutely. And we'll certainly get into more about AI, but I do feel like there's a sense that there's a lot of high stakes, right? And one of the things that has struck me in conversations in recent weeks is this sort of cycle of crises and that this, you know, sense of being in crisis has become sort of a new normal. So how do institutions and systems need to adapt to that sort of new reality, I think, is something that I'll be looking at. And I think something also that is part of the backdrop of some of these conversations. I want to...

[00:05:22] Rachel Glennerster: I think one interesting... Yeah, can I just add one thing on that? There's been this sense, not just of crisis, but also of multilateralism falling apart and not being able to respond. And I think what we don't say enough is that actually, the international financial institutions are weathering these crises remarkably well, compared to other multilaterals. So this is an environment where China, and, Russia, and the US and Iran and all of these actors, they may be at war with each other, but they sit down across the table and the IMF and World Bank and hammer out deals on a regular basis. So I think that's the encouraging part of where we are.

[00:06:14] Adva Saldinger: Yeah, so I think there's a lot of different things that are going to come up. And so I wanted to sort of get some other perspectives on what you're sort of watching or expecting to come out of next week. So Clem, maybe I'll come to you first. What are the sort of big issues that you have your eye on that you think will come up? And what are you sort of looking out for next week?

[00:06:39] Clemence Landers: Yes, thanks, Adva. So I think what I'm going to be most closely watching for is what is on offer for the poorest countries. And as Rachel laid out, we are in a time of crisis. And there's sort of a remarkable story that a lot of countries have done just a very good job weathering the crisis. I think it's partially due to the fact that countries have built really solid macro buffers and have become more reliant on their own domestic capital markets. And less subject to a lot of the vagaries of international finance. And we've just seen a lot of EMs. You know, Rachel was talking about bonds, the big bond sell off in the United States. That's not necessarily happening in a lot of EMs. And there's some interesting decoupling here happening for some of the more established EMs where they're just not suffering the way that EMs generally suffer when there's turmoil in the U.S. bond markets. So there's a very good story of resilience there. But there's also a other group of countries that are very exposed to the international system, that are very exposed to higher interest rates in the United States, that are very, very vulnerable. And so what I'll be looking for very closely is what's on offer for these countries. And in particular, next year is the replenishment of the International Development Association. This is the World Bank's arm for the world's poorest countries. There's been a lot of quiet whispers among some of the biggest donors that they're just not going to be able to meet their commitments, the commitment levels that they've sustained in the past. And that could prove really tragic for a lot of the world's most vulnerable countries that are just heavily reliant on this instrument for financing. And this is at a time when China's pulling back. So net flows to China may be turning negative. Eurobonds, a lot of countries are issuing Eurobonds now at 9%, 10%. So they're rolling over debt that they were issuing at much more affordable rates. So IDA really becomes an incredibly important port of call. So what I'm going to be looking for is a early indications of where donors are in terms of just how much they think they can contribute, but also the policy agenda around IDA. There's a lot of areas where I think a lot of reform is needed, especially around focusing IDA on the most vulnerable countries that really rely on it as part of the global financial safety net.

[00:09:04] Adva Saldinger: Yeah, I think one of the things that we're also seeing, especially as there's kind of this focus on private capital mobilization, is how does that sort of play out? How does that then impact the poorest countries and places where it's the hardest to mobilize that capital, right? So is the offer from the World Bank different in those places? And how are they differentiating some of that? I think will be interesting as well. But yeah, and how does IDA then look to leverage the money it does get? What does it mean if it has to go to the capital markets in order to sort of reach the top line number that they're looking for? What does that mean in terms of the mix of loans versus grants that are provided to countries? Yeah, absolutely. Oh, go ahead. Sorry, Mikaela. No, no, you can go ahead, Clem.

[00:09:59] Clemence Landers: I was just going to say, absolutely. And one of the things, you know, we talk a lot about countries financing costs, but the other thing is IDA and IBRD's financing costs. And IDA was just celebrating the fact that it did its first bond issuance in U.S. markets, finally got an exemption from the Securities and Exchange Commission to issue. But it did issue at close to 5%, which is high. And it's not, you know, an outlier relative to the other MDBs. It's just that the MDBs have to pay a lot more to finance themselves because we're in a higher interest rate environment and they have to pass on those higher financing costs to their clients. So we're really in a moment where the cost of capital is going to be really central to a lot of these conversations. But sorry, Mikaela, I cut you off.

[00:10:38] Mikaela Gavas: No, no. I just wanted to maybe pull what Rachel mentioned about, you know, sort of multilateral commitment, Clem, on sort of offer for the poorest countries and private mobilization and sort of shine a bit of a European lens on it as well, because actually there are two things that I'll be watching from a European shareholder perspective. First, it's really to see if Europe's multilateral commitment holds up as its aid shrinks and as it becomes a lot more self-interested. So we know that EU aid, for example, is moving much more from grants to investment, from poverty reduction to strategic and commercial interest. And at the same time, you've got European aid budgets that are being absorbed by Ukraine and the neighborhood. And so I think, you know, European shareholders will want the bank to step up there too. But the question is whether European shareholders are looking to treat IDA specifically as a shock absorber for the aid that they cut elsewhere or as just another budget to squeeze. So that's the first thing. The second thing is really to see if the European shareholders push the bank and themselves, for that matter, to aim their scarce risk capital at low income and fragile countries. So just talking about, you know, the bank having reported a record $112 billion in private capital mobilized. But I think only about $3 billion of that actually goes to low income countries. And Europe actually has the same problem. The money in Europe goes where it's easiest to place, and that's banking and financial services, most of which is hard currency lending through banks and middle income countries. The European DFIs, the development finance institutions, crowd the same space and in the same low risk segments, and sometimes backed by the same EU guarantees. And so that leaves the hard cases underserved. So it's fragile and low income countries, local currency finance, early stage first loss capital, all of that sort of gets the least. So, yeah, those two things that I'll be watching.

[00:13:22] Adva Saldinger: Yeah, I think it'll be interesting to see whether the world, I do think there's sort of a recognition of that challenge. I heard Ajay Banga, the president of the World Bank, speak in New York during the UN General Assembly week, and he was talking about that $112 billion. You know, we recognize that in sort of fragile and violence-affected countries that we're not going to be able to mobilize in the same way as in other places. And he sort of hinted at that there would be some sort of announcement about what the bank might do on sort of the private sector side to help businesses in those countries coming at the Annual Meetings. So I will be very curious to hear what that might be. And I'm curious, Mikaela, to follow up on one thing, whether, you know, you talked about how Europe is sort of a lot of the aid is more self-interested, and I think we're seeing that from a lot of donors. Do you think that starts to then impact what they're asking for from the World Bank, from MDBs? Does that sort of self-interest spill over into their demands from these institutions where they're key shareholders?

[00:14:44] Mikaela Gavas: I think it does, to a certain extent, although, to be honest, it shouldn't. I mean, you know, the thing is, this is a real wake-up call for Europe. I mean, if Europe really wants climate fragility and the poorest to stay central, it's going to have to actually make that case itself and pay for it. But, you know, you've got energy shocks, instability in the neighborhood and in Africa, migration pressures. They're hitting Europe directly. So, in fact, a bank that works well and on those issues is very much in Europe's own interest. But, of course, you know, Europe's credibility really depends on it matching its rhetoric with its own money and a coordinated voice. And, yeah, that's elusive at the moment.

[00:15:50] Rachel Glennerster: Can I just come in on that point? Because one of the areas that you see pressure on this national interest part is countries complaining that, donor countries complaining that China is getting, China Construction or other firms are winning quite a lot of the contracts. For the World Bank or other multilateral development banks. And the thing to realize there is, you know, if you're building a road, China is about the level of income where they have a comparative advantage in building roads. I mean, Europe and the UK and the US are in higher level, higher technology things. So, you know, Turkey and China are good at building roads. And so I really, I do worry about that because if they start putting restrictions on how many grants or trying to influence things so that more of the open bids go to European or US companies, that's just going to raise the cost and, you know, we'll get less development.

[00:17:11] Adva Saldinger: I do think we've already seen some procurement changes at the bank sort of in that direction. Right. And I think that's partly being driven by shareholders who say, hey, we want our companies to benefit from these contracts. Right. And, you know, so I think that's definitely something to watch. We've certainly seen some procurement changes in that direction that, you know, at least if not explicitly in a veiled way are targeting China. And some of it is in terms of, you know, not prioritizing lowest cost, but trying to, you know, couch it in a, you know, best product and things like that. So I think that that will be an interesting piece of this to watch what it does to the sort of cost side of the perspective. And we've also seen some impact sort of on, you know, countries wanting more local companies involved as well. So some procurement changes sort of targeting that. Rachel, did you want to jump in? No, I agree. Well, Markus, I wanted to turn to you and ask you a bit about what you're sort of watching next week.

[00:18:19] Markus Goldstein: Yeah, the advantage of going last is you can build on what others have said. So I would follow Rachel and I'm watching AI. I think the World Development Report was significantly different than the digital strategy that the bank unveiled in end of June, early July. And so I want to see how that plays out. In particular, I'm watching how they're going to think about AI sovereignty investments. I'd like to see more on labor markets. And I'm wondering if they're going to say anything about transformative AI. I think Kristalina's speech might be a nudge in that direction. So it'd be interesting to see. And then the other thing I'm watching is to pick up on this point of Rachel on sort of increased prices that the countries are facing. Futures are also up. So I think markets expect this to persist. And then Clem's point that the countries have weathered this so far with fiscal tightening. I think the question is whether we're reaching the limits. And I think the Bank's been building a response. And I'm wondering if they're going to be talking about that.

[00:19:38] Adva Saldinger: Well, I can say that I've been asking the Bank about their response. They announced some pretty significant commitments back in the spring. But I have not yet sort of heard from them about the type of demand or the type of support that countries have asked for. Though we may hear more, I would guess, in the next month. I don't know that they will announce anything specific at the meetings in terms of the sense that I get from them. But I am pushing and I've actually been talking to other MDBs about their sort of response to some of the shocks from the Iran crisis specifically.

[00:20:12] Markus Goldstein: I mean, so I was digging into this because I was also asking your same question. And one of the interesting things they did in 2024 was release yet another toolkit. But this was the crisis response toolkit. And part of that was this really innovative loan product, which is you take a loan. There's no dollar value to it. But basically, this is a loan that lets you declare a crisis nationally. And then you can draw down a percentage of your portfolio. So it's basically insurance, right? And this was built for, I think, originally, if I read it right, for natural disasters. But they've added fuel and cash transfers, which are two of the coping mechanisms you'd expect to see with the current crisis. And there's been in the first two years, there were 15 of these loans taken by countries. In the four months following the Iran, the start of hostilities in Iran, you saw 16 countries take these loans. So there's been a real big uptake, particularly among the poorest and more vulnerable in this product. So I think that is arguably an interesting and innovative kind of response because it's much more country activated than we've seen before. I think the question is, if this starts to get activated for this particular case, what's that going to do to the IDA replenishment and questions like that?

[00:21:59] Adva Saldinger: Absolutely. I wanted to let our audience know that we'd love to hear your questions, and we'll come to them in a little bit. There should be a QR code on the screen right now where you can sort of scan that and submit your questions. And we'll try to get to as many as we can. So I'd encourage you to sort of submit your questions as you have them, and we'll get to them in a little bit. Markus, maybe I'll come back to you and we can dig in a little bit more on AI. You know, the Bank has clearly made this a priority. It's one of the flagship events next week. I wouldn't be surprised if we might see some announcements on AI. I'd be curious sort of what you see in terms of the discrepancies between the digital policy and the World Development Report and sort of what you think the Bank could be doing on AI. And likewise, what maybe the IMF's role might be in this. What we heard from Kristalina, her quote was, love it, hate it, or fear it. AI is here. It's rapidly becoming a key driver of countries' relative fortunes in the global economy, and that some economies may well be bypassed given the way the system is growing today. And that could widen global inequality, which we're already sort of seeing widen. So curious your thoughts on that.

[00:23:22] Markus Goldstein: Yeah, there's a lot to talk about. Let me pick three things to focus on. The first is AI sovereignty. And to be fair to the digital strategy, it was released in June. And in June is when Anthropic released a model that's capable of hacking entire government systems. Three days later, the U.S. government put export controls on it, proving to the rest of the world they have no sovereignty in this matter. And so to me, that means sovereignty is like it's a non-starter because they can hack you and they control the access to the antidote. And the WDR strongly argues that thinking about AI sovereignty is a trap. And I totally agree with that argument. I think what the question then is, so how do we help countries think about agency in this world? And there's some ideas in the WDR. I think they're a start, diversifying the models you use is one of them. But I think there's a lot of work to do in that space. And it's fast moving, to be fair to the bank. But I would like to see a nice proactive response instead of a reactive response. On labor markets, I think the WDR makes a great point that this is a known unknown, what's going to be the labor impacts. And I also agree, predicting is, every prediction has been made and one of them is right, but we have no idea which one it is. And so in an environment like that, can we think about a concerted response to build resilient labor markets? And you're seeing some arguments come out of social protection, but not a strong one in response to AI. So thinking about portable benefits, certifications, cash transfers to help people adjust, nimble kind of job retraining, all of these elements. There was some action around this in Turkey from the Bank. So I'd like to see more of that. And then the last is more of a big bet, which would be, there's a transformative potential here. And we saw with the advent of cell phones, a leapfrogging happening in developing countries. And so will we see an argument like that come from the Bank? So if you think about the Ministry of Agriculture, having data on ministry staffing, having data on ordering of pesticides, having pest detection data, all three of these kinds of data talking to each other, which is possible with AI, you could really have a transformative moment for government services and markets in these countries. And there's a leapfrogging potential. Will we see a bold argument from the Bank?

[00:26:56] Adva Saldinger: One of my questions, the Bank has talked a lot about sort of small AI. And I think one of the really important things to also think about is that current models really are only very effective in a very limited number of languages, right? So if you talk about how do you sort of close that sort of AI inequality gap that might open up, what do you think are some of the things that maybe the bank could do? And what do you think they sort of mean by small AI in the big picture?

[00:27:32] Adva Saldinger: So small AI, I think, has lots of potential. We think about it for applications. So maybe a tutoring program for students or a supplement to the teacher, that could use a smaller local model. And that totally makes sense. I think another hard discussion to have is like, what is good enough? And I think small AI creates a nice box for that discussion. So that's one. The language issue you raised is a real one. It's not a key performance indicator for the big models. And so looking at data from earlier this year, you could see Swahili accuracy bounce around, right? Like Swahili is one of the languages these models tend to be better at. And so I think the bank, particularly with the amount of data that it has helped countries collect, can serve a really nice coordinating function. And from what I understand, there's discussions to this effect. So this isn't new. To help make sure these models are better at the many, many... You know, I think it's going to be a long time till we... It's AI. I think it'll be longer till we get to the languages that are spoken by a lot fewer people. But I think there's a huge gain to be made. And the bank can be helpful in helping countries earn some returns on their data and also helping the AI companies expand their reach.

[00:29:15] Adva Saldinger: Great. Yeah, I mean...

[00:29:20] Rachel Glennerster: Can I come in on this point? Because I think people focus on language and that's important. But there's also many other ways in which AI is not focusing on the needs of low and middle-income countries. And it won't because the financial incentives aren't there unless people are proactive, including the World Bank and other multilateral development banks and donors. And examples are, you know, you're not going to focus on the diseases that are prevalent in low and middle-income countries. You know, companies aren't going to use it to focus on those diseases because there's a lot less money to be made there. And low and middle-income countries are very good at driving down the price at which they buy treatments for tropical diseases. So diseases, crops are very different in different countries. So I think, you know, the challenges that kids face, the way that teachers work, all of these things are different. So languages are an example that people can get at quickly and understand that that's different. But there's a whole plethora. And I'd also say there's an area where it would be really good for the bank to get involved is helping governments think about how to purchase AI. Because the standard way in which governments run tenders to purchase things, it's just the cheapest possible bid. And or maybe you look at quality and then you look at, you know, a test that was run three years ago, by which point that is not the best program anymore. So we really and there's a real risk that these big companies are going out there and offering lots of support to countries in the hope that they will lock them in so they can only use their product in the future. So there's a lot of kind of thinking about the economics of procurement in this space that we really need to focus on.

[00:31:35] Adva Saldinger: I mean, I think, to your point, language is sort of an easy one to get at. But the data that goes into these models is really important. Who's generating it? Who owns it? Who does it reflect, I think, is a key part of this, right? Because the solution to a maternal health problem in Zambia is very different than in another country. And so if it could be an incredible tool perhaps to provide people access to things like health care or agricultural information, but it has to be built on the right data.

[00:32:07] Rachel Glennerster: Yeah, it's not just about the right data. The data might be there, but the financial incentive to work on it is not.

[00:32:16] Adva Saldinger: Well, I wanted to switch gears a little bit. We've had a couple of questions come in on sort of where the World Bank will stand on climate. Obviously, in the past year, a lot of conversations and debates about the Climate Change Action Plan. And obviously, we saw the bank drop its 45 percent target, but sort of agree to keep climate on the agenda, but without that target. And I mean, this is the place where I think the geopolitics was really at play, where you saw sort of the U.S. really pushing strong for that target to go away. And so I'm curious, you know, we're past sort of that CCAP discussion, but what do you think this now means for what the bank does on climate and sort of where shareholders sort of push it to go? And Mikaela, maybe I'll come to you first and Clem, I can come to you as well.

[00:33:06] Mikaela Gavas: OK, again, from a European shareholders perspective, look, Europe wants the Bank to stay ambitious on climate, but the problem is its own retreat at home weakens its case. So I think France and I think 18 or so other European countries actually fought to keep the Bank's 45 percent target. But obviously, as you said, that failed. Now, the reason why Europe's case is weaker is because of what it's actually doing at home. So, for example, the Commission, I think, has proposed delaying the methane rules by a year. It's also proposed diluting the 2035 engine ban, I think from about 100 percent to 90 percent CO2 cut for new cars. So it's really pulling back on its own climate commitments. And of course, the reason is the energy crisis. And in fact, it was the president of the Commission who said that the Hormuz disruption added about 90 billion euros to Europe's fossil fuel import bill. So, yeah, I think diversifying away from Russian gas has actually moved the dependency rather than, you know, removed it. So, yeah.

[00:34:43] Adva Saldinger: Clem, did you want to weigh in on that as well? Yeah, no, I would I would just add to that.

[00:34:51] Clemence Landers: I think I think this was sort of an agreement that everyone could sort of reluctantly agree to. And in particular, I think the reality is dropping the climate finance target is symbolically very significant. But the World Bank is a demand driven institution. And I would be surprised if we saw really big changes in the composition of country demand for climate finance. In a way, it's the same, you know, in the United States now. I was just reading there's more installed solar capacity in Texas than in California. And it's not because Texas has become full of green hippies. It's because the economics are there and it makes economic sense. And I think that that's where most of the world is now. So, you know, we'll we'll be monitoring this and tracking this very closely at CGD. In the past, we looked at the composition of World Bank climate finance and how it was reporting on the climate finance at a time when the Bank was really moving towards really big aspirational targets. We found that there was actually quite a bit of greenwashing. This was this was Scott Morris and others who released a paper a few years ago. I think it will be interesting to do another round of that paper to see what this means and whether sort of the opposite is happening is a lot of projects that sort of could be tagged as climate and end up not being tagged to to sort of change a little bit the the image of what the Bank is financing. But at the end of the day, I think the fundamental thing is this is a demand driven institution and no shareholder alone can block a project. So I would really be very surprised if we saw a really big shift in the composition of country of country financing.

[00:36:38] Adva Saldinger: Yeah, I think one of the things that will be interesting is actually just speaking to someone from EBRD earlier today. And they're seeing in some countries and part of their portfolio that's responding to sort of the conflict in the Middle East, they're seeing a real increase in demand for renewable energy projects. So countries are sort of accelerating their plans to diversify their energy mix, which, you know, Mikaela, it sounds like maybe that's not happening as much in Europe. But I think that will be an interesting piece of this as countries are thinking about, you know, how do they protect themselves from these sort of energy shocks, having more of a energy mix that includes renewables that they have control over might be a part of that. I'm curious if you're hearing anything sort of to that effect or whether you think we might see more from the bank on that, either through in Africa, through M300, if we see any changes or demand or elsewhere.

[00:37:37] Clemence Landers: Sorry, that for me. Yeah, I mean, I think that's a that's an interesting question. And in particular, you know, there's also this all of the above energy mix and what, you know, the direction of travel is on nuclear. My understanding is that they're setting up a trust fund around nuclear finance. This was, again, an early concession the Bank made to the United States. So, you know, we'll be it's a space to watch for sure.

[00:38:05] Adva Saldinger: I wanted to talk about private capital mobilization a little bit. This is something that I think, you know, we talked about the numbers that the bank has been touting of this 112 billion dollars. And a lot of my conversations, people are perhaps a little skeptical because they don't have a ton of information about sort of what you know, how the Bank got to those numbers. We also saw last week that the task force on mobilization released a new methodology for how all the MDBs are going to report on mobilization and also broke it out into sort of a number of different categories where they're going to count certain things in different buckets in terms of generation and catalyzation. And that new methodology is much more detailed than the prior methodology. But we're certainly seeing this direction of travel towards doing more private capital mobilization through securitizations and other vehicles. And so I'm curious what you think we might see on that next week. What questions sort of you're asking in terms of the bank's approach to this? And that's probably for you that happy for others to weigh in as well.

[00:39:14] Clemence Landers: Yeah, I mean, as you said, it's a pretty eye popping increase. I think it's the number grew by about three times in the past two or three years. S the numbers are really four years. Sorry. Yeah. 2022. So the numbers are pretty are pretty just very dramatic. I think we're all at CGD very eager to sink our teeth into the disaggregated data, which hasn't been released yet. But I think we'll have some more sophisticated analysis soon. I will say, obviously, you know, we talk a lot about volumes and volumes are important. But my colleagues, Nancy Lee and Sam Attridge just released a really good note around the fact that really this isn't the sole metric of success. I mean, that's obvious. And it's really the impact of this mobilized capital that we have to understand what sectors are the investments going into and what kinds of countries. Right. It's much easier to mobilize private capital in established markets than it is in low income countries. I will say, you know, I have been very interested. I mean, you alluded to securitizations. I would say I've been very interested in the Bank's guarantee platform and the real uptake on on the guarantee side. We at CGD did a paper a couple of years ago around sovereign guarantees in the MDB system. And there had been very few at the time, I think only about 10. But we did find that they helped lower countries borrowing costs by about 300 basis points, which is pretty enormous. And Banga has really been pushing for more uptake on guarantees. There's always been a lot of pushback at the Bank, which kind of has been a very loan based institution that sort of lives and dies by its loan spreads. And guarantees are more complex and more risky. But Banga has really been pushing for more. And so we saw this innovative debt for education or debt for health swap in Cote d'Ivoire that helped Cote d'Ivoire do a syndicated loan at a pretty affordable rate. And I do think these are these are both instruments that kind of solve two problems. One is in terms of mobilizing at scale, but also lowering costs of capital at a time that capital has become very expensive. And then when you do a guarantee that's tied to like an investment loan or P4R, you also then direct the financing towards development. So I think this is actually quite a promising, promising venue. And I've been really encouraged to see the Bank president pushing on it.

[00:41:43] Adva Saldinger: And certainly that one hundred and twelve billion number is built on the back of the bank ramping up its guarantees under this new sort of one world bank guarantee platform that sort of brought the guarantee operations from IFC and from Iberia and IDA sort of into one central place so they can work together. They can sort of stack different types of guarantees. And in fact, they I think they had a target that was, you know, 20 billion annual in guarantees by 2030. And when what they announced as part of this was that they've last year they hit twenty five billion. So they've already sort of exceeded that target and I think are accelerating guarantees. And then I think that, you know, how are these guarantees structured? What are the mechanisms they're using? Are they thinking about how they could use technical assistance stacked on a guarantee to ensure that it has long term impact is something I talk about. And I actually spoke to Sam Attridge, who you mentioned just last week about how, you know, how does the World Bank think about market building in this mobilization conversation and not just, you know, bringing in the private sector on one off deals, but in sort of a bigger picture approach, which I think is an interesting piece of this.

[00:42:59] Rachel Glennerster: Yeah, I think. Can I just come in on that point? Because I, you know, the most impactful thing you can do on mobilizing private sector capital, whether it's from the domestic market or internationally, is to improve the policies that make people want to invest in these countries and want to invest well. So, you know, and it's very, frankly, very hard to do an accurate calculation of how much you've mobilized because you don't know what would have happened without, you know, how much of that investment would have happened without the guarantee and maybe it's cheaper. But so it's very hard to measure. But, you know, I'm all for trying to measure things and doing as well as you can, even if it's not perfect. But I do think it's important to hang on to the policy angle. One of the things that I think is important of bringing the IFC and the World Bank closer together is, is that if the IFC in working with companies realizes that there are particular constraints that are very hard, that are deterring people from working in a country, then the World Bank, you know, the IBRD or IDA can work with the country to try and fix those policies. So I think it's important to think about the two as working together. And the much bigger win is, is, is the policy change where it's almost impossible to count how much that brings it.

[00:44:41] Adva Saldinger: And that's where you could truly unlock things at, you know, at a much greater scale. Right. And I think that to me is sort of this balance of like, what is the short term? You might want to bring private sector into transactions or into the balance sheets in different ways today. But how do you also think sort of in the long term about what are the long, big picture changes that will ultimately create markets and unlock capital in that way? We have a couple questions about the World Bank's health work. And, you know, they made this big announcement on universal health coverage and have, you know, that was like one of their big bets a couple of years ago. So, you know, sort of curious about how, what we might see on that or how that's moving along. And then a question about whether the bank sort of sees a role for itself in supporting countries to develop their own sort of sustainable domestic funding for health challenges. And I think that's probably particularly relevant in an environment where we see so many cuts to health budgets that used to come from, from aid money. So I don't know who wants to take that.

[00:45:49] Rachel Glennerster: Yeah, I mean, let me take that health financing question. Absolutely. I mean, that is a big thing that the World Bank does is help countries think about tax revenues and what is the most effective way to raise taxes. And it may or may not make sense to hypothecate, i.e. make, say that a particular tax is for health, but it has long been the objective of the World Bank and IMF to help countries raise taxes effectively and to be able to cover the costs. I mean, a long time ago, I worked in the IMF and we were, it was a big part of what we were spending our time on was, you know, measuring how much taxes they were raising because the objective was eventually to not need support from donors. So there's been a lot of interest in the health world about this, but, you know, economists and international financial institutions have been plugging away at thinking about this. And there's a lot of good research on how to improve tax raises, how to improve tax administration. And, you know, for example, on property tax, which a lot of rich people manage to evade other taxes, but it's quite difficult to hide a big mansion and rich people do quite like to live in large houses. So, you know, there's a lot of work on ways that governments can use technology, satellite, etc. with a combination of that plus human knowledge about which are the fancy parts of town to, you know, to really get higher taxes. So Sierra Leone is a country that's been doing that, a number of countries in West Africa, but it does require political will to go after, you know, the rich and make sure that they pay. In terms of universal health coverage, I think there's a lot of different ways, depending on a country's level of income, about what's the right way to get health coverage. It used to be that the World Bank kind of automatically went to an insurance system, which any economist will tell you has a lot of problems. Health insurance is, you know, is the classic example of moral hazard and asymmetric information. So, you know, insurance plans don't always work very well, but there are, you know, it might be the right approach at different levels of income. So working that through with countries, I think is very important and not defaulting to this is how rich countries do it, that's how we ought to do it in poor countries.

[00:48:58] Adva Saldinger: And just to give a slightly shameless plug, I know one of my colleagues on our global health team is currently working on a story about that World Bank commitment to universal health coverage. So we should have more information soon sort of on where they are in the progress on that. And I think one of the things that we find important is the World Bank has made quite a few of these sort of big bets now. Mission 300, Water Forward, AgriConnect. And so I think it's important to sort of see how is that sort of actually changing perhaps the bank's lending behavior and posture and where are they sort of standing in terms of meeting those goals. Clem, we had a question.

[00:49:36] Rachel Glennerster: Although not all of these big bets should necessarily be voluntary. I'm not a big fan of. So the commitment to electrify, you know, link everyone in Africa to the grid, I think it's much more important to link firms to reliable energy than for everybody to be on the grid, because that will give people jobs and jobs is what people care about.

[00:50:07] Adva Saldinger: And I think that's been a debate within M300, right? Is it targeting individual connections or is it also looking at sort of baseload power? And I, you know, at least from what I've heard, I think internally they are grappling with that and trying to look at making it not just about sort of the individual connection. You talked about jobs and that will obviously, you know, I mean, that's, you know, the Bank has made that its North Star. I think it will come up next week. I'm curious if there's, you know, something specific you want to see the bank do on jobs. I think there's so much talk about jobs, but the real question is, like, what can the Bank actively do to create jobs? Is it doing that? I think there's quite a few questions. I'm curious what you'd like to see from them. Rachel, I don't know if you want to.

[00:50:50] Rachel Glennerster: I think there's a huge amount the Bank can do to help countries create jobs. As long as you understand that, you know, jobs in different countries, it's not just a formal sector job in a factory, right? That's not the only job that exists. So, you know, a lot of people are working hard and getting income and would count, you know, count as being employed that don't fit that very precise mold. And we know a lot about how to improve productivity, you know, so that people are working and getting more income and, you know, generating more income for their community. And that's everything from health and education to transport and energy and all the things that the bank does. So, I mean, those are the things that it works on. So I think recognizing that that is, you know, that all of those aspects feed into increasing employment, you know, reducing underemployment, increasing productivity, because that is what, you know, generates growth and better lives. So, and reducing certain kinds of harmful regulation and improving trade, like all of these things that the Bank works on feed into better jobs.

[00:52:21] Adva Saldinger: Yeah. One of the questions we had, Clem, was about sort of the US position and how the US administration is sort of influencing the bank and the IMF and perhaps what we might see from them. And I know we're running short on time, but we haven't talked about debt, which is obviously sort of, I think, a key component of what many countries are grappling with. And it's actually one place where, at least in terms of what the US Treasury has said, that they want to see more action on debt. So maybe I'll try to combine those questions, but curious what you're looking out for on debt and then, you know, how you're seeing the US administration sort of influencing these institutions.

[00:53:05] Clemence Landers: Yeah, let me see if I can weave these together really in a way that does justice to them, but also respecting our time. So on debt. So debt has been top of agenda for six years. And what I would say is the conversation has moved from one around restructurings and trying to encourage countries to proactively restructure to one around liquidity. So, you know, the first, the international community created the sovereign, the common framework during COVID, which was supposed to kind of bring in non-Paris Club creditors into a Paris Club-like process. And it didn't work super well. Zambia just completed its restructuring process, and it took about over three years. And that acted as a real deterrent for a lot of other countries that maybe should have restructured. They were like, we don't want to find ourselves in a three-year kind of financing limbo. And so they just sort of muddled through. Right now, Senegal is going through what they're calling a compressed common framework. The new government came in and found something like $13 billion in hidden debt. And so they're now resolving that. And I think they aim to resolve it by December. So if Senegal can go through restructuring that rapidly, it will actually be kind of prove that the restructuring process is starting to work well. It can be complicated for Senegal because they have bondholders, international bondholders, and they have China and France as creditors. So all of these creditors are going to have to be able to agree on something comparable, right? The comparability of treatment is really the North Star in these restructuring agreements. So on liquidity, this has really become the central debate, is how do we help countries weather this moment of – I wouldn't say we're not in a period of illiquidity. I was just looking at some of the African bond issuances that have been three, four, five times oversubscribed. So that doesn't suggest we're in a moment where there's a liquidity shortage, but we are in a moment where liquidity – there's just been a big global repricing, right? So a lot of countries that were financing themselves at pretty affordable rates are now trying to refinance their euro bonds. Euro bonds have bullet repayments, so you kind of have this moment where you have to do a refinancing and they're – sorry, a rollover, and they're rolling over their debt at like 8%, 9%. And when you're in those rates, you often end up paying more in interest than you do in principle. So it's really, really expensive. And so the task here is how do we help countries deal with these rollovers in a way that doesn't break the Bank? But also, it's not just the private markets. We have some forthcoming CGD research on the fact that because the IMF did so much during COVID, a lot of countries are now going to start having to repay a lot of money to the IMF and may find themselves paying the IMF more than they're getting from the fund. So the IMF is also potentially a suck on liquidity. And on top of that, we also have a lot of bilateral creditors that are also themselves pulling back. Data on China is incomplete, but BRI is no longer as large as it was a few years ago. And so China may also be sucking in more money than it's putting out into the system. So there's a real problem here. And this is where a lot of the conversations are focused is how can we make sure net flows remain positive for the lowest income countries? It's hard to tell the private sector what to do. So that's where things like credit enhancements and guarantees may come in to help countries refinance at lower rates. In a perfect world, the G20 would make some sort of a commitment on a bilateral basis to keep net flows positive, but we're not. And there's a lot of work towards that. My colleagues at CGD have some work around debt suspension clauses where some countries, if they're facing a shock, can activate just a stoppage in their external debt repayments. So in order to kind of be able to devote more of their repayments towards spending on the shock. So there are a lot of really good elements of a solution here, but we do need a political bargain. And I think this will be a big, big topic in Bangkok.

[00:57:11] Adva Saldinger: And in terms of the sort of U.S. influence on these institutions?

[00:57:18] Clemence Landers: So I would say, you know, look, the U.S. has had a lot of wins this year at the World Bank and the IMF. We mentioned climate. We mentioned procurement. So I think, you know, it's quite remarkable, you know, taking a step back. The U.S. government took a bazooka to its own bilateral aid agency. But things have been pretty business as usual in these multilateral institutions, which has in a way been, you know, quite a blessing, especially given how important a role they play. And so I wouldn't expect, you know, a huge amount of demands that the U.S. is coming to Bangkok with. I think they have a lot of, you know, a good amount of victory laps that they can do. I will say, you know, in Besson's speech last April, he really did call for a back to basics. And part of the back to basics was a focus on the poorest countries. And I think this is actually a really welcome call. We have a paper that came out that shows that half of IDA countries are now very significantly above the graduation threshold. And a lot of these countries are countries that are also have euro bonds and are credit worthy. And so shouldn't IDA be focused more on the poorest countries, especially in this moment of crisis? And similarly, when we look at IBRD, over the past couple of years, more and more IBRD lending is going to countries above the graduation threshold, too. So shouldn't IBRD be providing more to lower middle income countries that are credit worthy but need some liquidity? So I think there are some elements of the Besson agenda that could potentially be really, really welcome if implemented at the institutions.

[00:59:03] Adva Saldinger: Yeah, and certainly we've seen a push from the U.S. for the World Bank to actually graduate countries and some of that targeted at China and the bank stopping to lend to China. But I think it's worthy of sort of a broader conversation given increasingly limited resources. We are nearly out of time. One other issue that I think will come up next week is philanthropy. The World Bank is hosting sort of a day-long philanthropy forum and is sort of really thinking about how it engages with philanthropy differently. So that's just another thing for folks to keep an eye on. And I think that's probably driven by an impulse for coordination, but also in a world with shrinking aid budgets, how do you leverage philanthropy and perhaps more strategic and in different ways? So it's another thing that I'll be keeping an eye out for. I think we've had a lot of food for thought here. It's obviously going to be a big week where we're going to sort of everything from how are individual countries approaching health to sort of the big geopolitics and will countries be able to come to agreements on any of these things? So plenty, plenty to watch for. And thank you all for sort of sharing all your insights and look forward to continuing the conversation and hearing more from you next week as we see all of this unfold.

[01:00:29] Panelists: Thank you. Thank you.