Despite lingering geopolitical tensions, work on this new vision and strategic direction – better known as the Evolution Roadmap – has advanced at a good pace. This week, governors reviewed its progress and approved next steps following the publication of a recent update. The Roadmap's ambition has also been reinforced with the appointment of Ajay Banga as the new World Bank President.

A sense of urgency for reform permeates the Roadmap. It is also the main thread that runs through the report of the G20 Independent Expert Group (IEG) on strengthening multilateral development banks (MDBs). The update’s acknowledgement that we are ‘running out of time’ might be less emphatic than IEG co-convenor Larry Summers warning us of a world on fire, but the underlying message is the same. Moreover, there is a sense in the update that World Bank management has listened to and taken on board external feedback, including ODI’s own priorities for reform.

What else did the Roadmap update get right? And which areas could be further improved?

Credit where credit is due: areas of progress

Vision and mission: The proposed new vision and mission statement for the World Bank embraces sustainability as a necessary attribute of poverty eradication and shared prosperity – the bank’s existing policy goals – thus integrating development and global challenges. In a major improvement, the vision now sets out an outcomes-focused results scorecard. Reflecting the systems-based, cross-sectoral and public-private nature of desired transformations, the proposed Global Challenges Programme (GCP) offers a practical orientation for organising work across the World Bank Group.

Operational model: Compared to the version published at the time of the Spring Meetings, the latest Roadmap update places greater emphasis on the importance of partnerships within the World Bank Group, with other MDBs and with national development banks (NDBs) in achieving sustainable and inclusive development. A Partnerships Charter is in the making, while greater use of co-financing platforms with other MDBs is also planned. This reflects a clear shift from the first version of the Roadmap, which was conspicuously silent on the World Bank Group’s role within the development finance landscape. A new ‘playbook’ encapsulates a series of proposals that aim to strengthen capacity at the country level, apply a lighter-handed (risk-based) approach to processes and controls throughout the project cycle, and further delegate authority to front-line teams. Efforts to reform the distinctive knowledge function of the World Bank are very welcome, as are the proposed principles guiding the allocation of (scarce) concessional finance – a first when it comes to sovereign lending instruments.

Financial model: The Roadmap lays the groundwork for putting into operation several of the recommendations made in 2022 by the G20’s Independent Panel on MDB Capital Adequacy Frameworks (CAFs), particularly lowering the equity/loan ratio (reflecting a slightly higher appetite for risk), exploring how callable capital can be safely included in MDBs’ CAFs, and introducing hybrid capital and portfolio guarantees to generate greater lending capacity. The updated measures to enable and mobilise private capital in operations – including guarantee schemes and the IFC’s originate-to-share facility for non-sovereign loans – are also positive signs. Moreover, the Private to Sovereign Climate Finance Investment Fund is a promising initiative that seeks to augment public projects with private resources, especially for large sustainable infrastructure investments. The caution expressed in the Roadmap to ensure that these innovations do not weaken MDB preferred creditor status and/or governance is merited and welcome.

Where the Evolution Roadmap remains silent and where more needs to be done (including by shareholders)

Vision and mission: While the vision and mission statements could bring closure to a contentious debate, they still require some explaining. In particular, the update on the mission statement could be clearer on climate and sustainability objectives: as currently articulated, it contains no explicit reference to – nor timelines for – helping clients deliver on their international commitments to limiting the global temperature increase while pursuing the poverty and equity objectives.

Operational model: The update is vague on the mechanisms to connect country priorities with the country, regional and global dimensions of the Bank’s and other players’ missions. As recommended in the first volume of the G20 IEG’s report on strengthening MDBs, country platforms could play a key role in some cases, especially if they are structured around concrete sector collaboration (as in the proposals of the MDB Climate Working Group).

Second, while the Bank’s new analytical tool – the Country Climate and Development Report – provides an excellent basis for such an integrated vision, this vision must be reflected in the way the Bank operates, which should connect systematically across country and sectoral responsibilities.

Third, the current list of GCPs combines both global and national challenges. A key task is to recognise where market failures exist and therefore need rectifying; for instance, justifying the use of concessional funding to enable scaled-up investment, and financing and allocating scarce resources efficiently. At the same time, implementation of the GCPs should be truly transformative and come in addition to current programmes, rather than simply being a cluster of existing operations.

Fourth, a risk-based approach to environmental and social standards and procurement throughout the project cycle, and greater delegation of authority, will require shareholders (and civil society organisations) to tolerate an increased risk that things might occasionally go wrong in these areas.

Fifth, reforming the World Bank’s knowledge function should go the extra mile. It should tailor products to the needs and requirements of their government counterparts, building and developing local expertise and networks to ensure bespoke technical assistance that is sustainable in the long term. These major concerns were raised by government officials in the 2021 ODI client survey.

Finally, for partnerships across the MDB system to materialise, management and shareholders should set incentives and rewards to promote shared diagnostics, the harmonisation of standards, and scaled-up, systematic collaboration with other MDBs (including borrower-led MDBs), NDBs and development finance institutions. Deep, strategic integration must also take place within the World Bank Group itself, where IBRD, IDA, IFC and MIGA should all work in a complementary manner to develop the private sector and mobilise or enable private resources. The nature and implementation of that oft-repeated ‘One Bank Group’ mantra (which has been reviewed elsewhere) is crucial, but is missing from the Roadmap update.

Financial model and resources: The World Bank should move more decisively to engage with all the recommendations of the independent review on MDBs’ CAFs. With its very high standing in capital markets and among credit rating agencies, the Bank should lead the way to help define standards on MDB financial capacity for the entire sector. This goes beyond marginal shifts in the equity/loans ratio and moves on hybrid capital and portfolio guarantees, commendable though these are; it also includes working with other MDBs and shareholders to systematically evaluate unique aspects of the MDB financial model, most notably preferred creditor treatment, callable capital and portfolio concentration. The results should be incorporated into revised CAFs to open up more lending capacity in a prudent and sustainable fashion. This would encourage credit rating agencies to better reflect the extraordinary financial strength of the World Bank in their methodologies and place shareholder discussions on capital needs on a firmer footing based on evidence. Deeper CAF reforms and fresh shareholder capital go hand in hand and are mutually reinforcing.

The discussions surrounding private capital mobilisation and ‘enabling’ actions are among the best contributions to the update. They could be further strengthened by setting institutional targets, refining the incentive machinery behind mobilisation and, in particular, creating a clear framework for the Bank, IFC and MIGA to cooperate and complement each other in these areas. There must be a greater sense of mutual responsibility for delivery.

Putting into operation the principles for the allocation of concessional finance – to be approved by the World Bank’s Board of Governors in Marrakech – is one the most critical tasks ahead. A scarce pot of grants and soft loans is expected to be allocated across a broader spectrum of countries – this includes incentives for mitigation finance in middle-income countries – without jeopardising resources for low-income countries. This might require different pricing structures for each type of global public good and its externalities.

To meet the expanded mandate for the World Bank, shareholders should commit to an ambitious IDA21 replenishment as recommended by G20 members in last month’s Delhi Declaration. The IEG on strengthening MDBs recommended tripling the size of IDA by 2030.

Furthermore, balance sheet optimisation measures remain necessary, but they are not sufficient to meet the financing that client countries need for a big push on investment. This means that discussions on a capital increase should start now, despite the political challenges that may ensue. Implementing the next stage of the World Bank’s Evolution Roadmap will require not only considerable technical work, but also (and more critically) the political will to follow it through.