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This podcast is part of a two-podcast series on reforming the Bretton Woods institutions by Ajay Chhibber, drawing on his paper on reforming the Bretton Woods Institutions. Some of the issues that he highlights are that the Bretton Woods institutions are no longer fit for purpose to meet today’s global challenges because their governance structures remain more or less what was created at the end of World War II, and their size and mandate have made them less able to address today’s challenges. They are now seen primarily as institutions to help deal with problems in the developing world, and they are struggling to even do that. What is needed today are genuinely global institutions that address global problems.

The first podcast in this series focuses on reforming the International Monetary Fund (IMF) and this podcast follows up with reforming the World Bank Group (WBG). In this podcast, Ajay Chhibber lays out a key criticism of the WBG, that it is not doing enough about climate change. Moreover, he states that what the world needs today is a global institution tasked with guiding a global transformation toward a sustainable planet and promoting shared prosperity. Instead, the World Bank, which earlier adapted well to address global poverty, is now seen as a multipurpose development bank that tries to provide support to countries for their perceived needs, without much overall strategic vision. Even in that role, it has issues and problems. Key critiques of the WBG include failed structural-adjustment programs, its flawed Doing Business Index, and an excessive focus on lending at the expense of its much better acclaimed non-lending services and analytical work. It used to be a leader in thinking on economic development, but has lately fallen behind, and is often seen as a laggard in terms of how it addresses these issues. Another major critique of the World Bank Group is its insufficient focus on catalyzing private flows.

It has also been overly conservative and risk-averse in the use of its capital base. As a result, it has not been able to lend as much and leverage private capital flows for infrastructure and climate change. It has underutilized its guarantees, focused largely on loans, and has not financed insurance facilities as much as it could have. It has also been criticized for being too slow and laden with bureaucratic procedures that cause costly delays for its borrowers and make it difficult for the private sector to want to do business with it. Its country focus has improved performance but neglected its ability to meet global and regional financing needs. It needs a substantial overhaul of its objectives and much more innovative use of its capital base and financial instruments.