[Gabriela Frias]

Good morning. How are you? Welcome to this historic event where the presidents of IDB and the World Bank will share with us their vision for development and also the importance for multilateral development banks working together. My name is Gabriela Frias. I'm a business journalist for CNN and I am delighted to be moderating this conversation. We're honored to have you and those following this live transmission. And now I would like to welcome to the stage IDB President Ilan Goldfajn and World Bank President Ajay Banga. 

[audience applauds] 

[Gabriela Frias]

Hello. [foreign language]. How are you?

[Ajay Banga]

Very well.

[Gabriela Frias]

This is a historic moment, so I'm delighted to be here talking to you. First things first, you're both relatively new in your roles, you both come from the private sector, and you both want to mobilize more capital to achieve more development. Why is it so important right now? President Goldfajn.

[Ajay Banga]

I'm going to let him go first since he's been in the job longer than I have. 

[Ilan Goldfajn]

Just a few months. It's interesting because we are going to have this difference for some time. You're always going to pass through me, or just a few months.

[Ajay Banga]

Well, age above beauty, so [inaudible]. 

[Ilan Goldfajn]

So, I think it's very important what we are doing here. We’ve known each other for some time. We were together in the private sector, then when I was at Central Bank, and now at the public sector. It's interesting because we were together and I was hearing Ajay mention impact and how he sees things, and I realized I was saying this too. It's very interesting that we are all talking about how important it is for us… It’s not the amount of money we disperse, but the actual impact. And for us, scale and impact is the name of the game. And to do scale, you need to join forces. We need to work differently but work together differently. We have been asked by the stakeholders, by [inaudible], by everybody, "You need to increase your ambition." And that's what we are doing here in terms of the MOU, in terms of the agreements we are having together, and that's very important. You ask me why now. Well, first it is because the other day I was reading Yogi Berra quotes and he says, "The future ain't what it used to be." We are in a point of no return in terms of climate, so we need trillions, but we are in the billions. So that's the first reason. Second reason is that I see a consensus in the region and I see a consensus out of the region that we need to change. And finally, leaderships. For some reason, we were both elected to make this change. So that's why it's now.

[Gabriela Frias]

Thank you.

[Ajay Banga]

The only thing I'd add to that, because that's actually a very complete answer, is that in my three months between being nominated and getting elected, I had a chance to meet 90-odd countries around the world, including Ilan at a couple of events. This message that he spoke about, the need for change, the need for speed, the need for impact, the need to measure how many girls went to school, how many people got a better job because of a skilling institute, how much greenhouse gas emissions we avoided as compared to how many dollars we put in or how many projects we finance. That aspect of outside-in thinking rather than inside-out thinking came through from clients, from stakeholders, from NGOs, from everybody. A sense of urgency attached to it is because I believe that the gains that we made on poverty alleviation as a society over the last three or four decades, a large part of it was enabled by the generation of jobs. What has happened during the pandemic and has got multiplied and exacerbated by the impact of climate, and by fragility and violence and food insecurity, all these crises have got together like a perfect storm. They are intertwined, they are interrelated, and the challenges therefore are at a point where it's like a geometric progression. You cannot win by yourself. You have to join forces, and you have to join forces not just between the multilateral banks or with governments, but actually with civil society, philanthropy and the private sector. Because the trillions that he referred to do not exist in a government's balance sheet or in the balance sheet of an MDB, but they do exist in our system with capital. So, we have to think of how to de-risk and enable private capital to come in as well. It's a complex Rubik's cube, but the reality is it is a Rubik's cube. It's intertwined.

[Gabriela Frias]

It's a very interesting era also because you highlight different. Different how? Since you've worked in different projects as multilateral development banks, as institutions, but when you say different, how should we understand that?

[Ajay Banga]

Well, the biggest difference, I think, has to be in this idea of impact. What tends to happen in a lot of our systems is that the way the process works is you will try and create a country strategy, a country partnership, framework is what the World Bank calls it. I'm sure they have a different name, but it's the same thing. We agree- 

[Ilan Goldfajn]

The [inaudible] strategy.

[Ajay Banga]

There you go. We agree on what's important for the next few years with the country and our teams, and then you try and focus resources on them, sometimes successfully, sometimes not so much. You end up spending a lot of time on trying to find projects that work with that country partnership framework. What we cannot afford to lose sight of is, finally, what's the end result of that? We cannot measure the project and we cannot celebrate the approvals. We have to celebrate the execution and the change in the lives of people. That celebration is a very different celebration from the inside-out approach that I think over the years most development finance institutions have come to be. That's the biggest difference. 

[Ilan Goldfajn]

It's also very complete, and I agree a hundred percent. We need that cultural change. Our institutions somehow have the culture of celebrating approvals, celebrating disbursements, and we need to change that through new incentives, new processes, new mentality, new country strategy, and also what the governments or our clients from the private sector expect from us. Impact from the beginning, from the leadership to the country representatives. We need all to change that.

[Ajay Banga]

Gabriela, I think that, if I could just add to that for a second, I think that we all have to realize that at the end of the day, the money we put in is a small percentage of the money that country needs to make a difference. It's not the dollars, it's the knowledge and the capacity and the skills and the expertise that we bring and our teams bring. We are very blessed by the teams we have. Right to the lowest level of our institutions are very qualified people, who have chosen to come to these institutions and not go to some other place where they personally, financially may have been better off. They're here for a purpose in their minds. Our job as the head of the institutions is to channelize that person, channelize their willingness to do this, and give them a chance to hit the ball out of the park, since we're talking Yogi Berra, and we should be thinking about that in that logic.

[Gabriela Frias]

Yeah, absolutely. You've recently traveled to Peru and Jamaica together. We covered it. It's a different trip, both of you. How did that influence the vision of collaboration? And maybe it was probably at a dinner time in Lima maybe or in Peru that you come up with this new way of doing things. 

[Ilan Goldfajn]

It was an historic trip. I think it was the first time the two presidents traveled together to the region. And yes, we were, in some small time, we just had some coffee and we said, "We need to think about-"

[Ajay Banga]

He remembers it as coffee. I remember it as a glass of wine. 

[Ilan Goldfajn]

You know what? I had coffee. He had wine. That's the reason.

[Gabriela Frias]

What time was it? No, I'm just kidding. 

[Ilan Goldfajn]

But then we agreed that we need to implement what we were talking about, what we are looking at. We need to somehow choose a few items that are important to us. We cannot just say, "Well, let's do it in general. We want to be very specific, very clear of where are we going to implement? Where are we going to work together?"

[Ajay Banga]

So what actually happened was that, first of all, when I started thinking about this trip, I reached out to him to say, "Listen, let's convert conversation to action. And the best action we can do is to be there together, because that changes the dialogue on the ground." He was amazing. He had a whole series of conflicting trips. He hasn't told you this, but he flew back and forth between the course of my trip in an effort to make it possible to attend both the Peru leg of my journey and the Jamaican leg of my journey and in the process convinced me that he cared deeply. Even though I knew him as a friend, that one action showed how deeply he cared about the topic. That was the first thing. Example, set your own example. The second thing was that when we did this back with a napkin discussion, we were trying to prioritize three things. We have come from a world where three things is what we can focus on. There's a hundred things we have to do together. That doesn't mean, nobody should take the message that the other 97 things are not important to the Inter-American Development Bank or to the World Bank. It's just that these three are what he and I will put all our own energy and personal capital into in an effort to make sure that our institutions and the governments we work with treat these with the priority they deserve. Those three were chosen for that impact across the region, rather than an individual country. That was how we ended up with this list of three.

[Ilan Goldfajn]

Let me just [inaudible].

[Gabriela Frias]

Please. 

[Ilan Goldfajn]

I've been saying that prioritizing is not choosing not to do what you don't want to do. It's choosing not to do the things you really want to do but are not chosen for priorities. You have a lot of things you want to do and you're prioritizing the ones that you can implement at that time.

[Gabriela Frias]

Got it. Let's talk about this era of working together, specifically on the areas that you decided to focus. And probably maybe the next following question is, were there other areas that you consider as well, but then discard it?

[Ajay Banga]

We are focusing on three spaces, the Amazon, but not only from the point of view of reforestation or slowing down deforestation, but actually approaching it as a full ecosystem, which includes the people who live off the Amazon. If you don't address them and their needs merely it's... If you don't do that, you're putting a Band-Aid on an open wound. We have to fix the whole piece. It's about both the protection of the Amazon, but also the prosperity of the people who live in the Amazon. Ilan educated me that day about some of the numbers to do with the Amazon. But the three things that stuck in my head from those numbers, one was the size of the Amazon and its contribution to our ecosystem. Water, forestry, biodiversity, carbon sink, the amount of carbon it stores, all that stuff. There are lots of good numbers, but that's the first piece. The second part he educated me about was that 40% of the 45, 50 million people who live in the Amazon live below the poverty line, and 40%, 50% of them do not have access to sanitation, let alone jobs. That I hadn't quite understood until that evening with him. I knew it was a challenge, I just didn't know that it was such a big challenge. That, to me, was a big difference. That's why the Amazon became an important part of this. If by 2028, Brazil as one country, as part of the Amazon wants to meet its own nationally determined contributions, they're going to need $5 billion a year objective to do something about that. Then after that, they're going to need three-plus billion every year to keep it going. This is real large sums of money. That picked up the one big topic, how do we help them raise money for this? Second big topic that came up as a result of this was around the idea of digitization and how digitization could deliver better governance, of course, but learning circumstances. We started discussing rural urban divides, gender divides in the access and affordability of digital technology. We said, "Let's pick both the topics, access rural urban Columbia as an opportunity, but also learning loss across the continent that happened accelerated during COVID-19." Can we use an idea of digital technology to connect the schools better, enable the schools and teachers and students to be better educated? That became the second one. The third one was the Caribbean and the impact that climate has on the Caribbean. Again, a topic that I actually had addressed in Paris with Prime Minister Mia Mottley. It is important to me as well, and to him. That's the three we chose. Now, I'll let him tell you about a couple more that were in our list, but we couldn't prioritize in our list of three. That doesn't mean we're not working on them. 

[Ilan Goldfajn]

So you can see that we have chosen very defined, very specific-

[Ajay Banga]

Narrow spaces. 

[Ilan Goldfajn]

Narrows. For example, in the Amazon we have this Amazon Forever umbrella program, which is basically want to get the financing, either we have Amazon bonds or other type of financing we want to bring, we to think about how to help countries to have the projects they need. We want to be able to let the countries of the Amazon have this coordination. As Ajay say, this is an holistic [inaudible]. It's about the people. It's about the cities, because there are cities there. It is about the economy. You have to offer something different. In the Caribbean, it is about resilience. Let me give you an example. We just had a hurricane in The Bahamas. The cost was 26% of GDP.

[Gabriela Frias]

26% of GDP? 

[Ilan Goldfajn]

GDP. And that's just one example. We are having more natural disasters with larger costs.

Thinking about resilience, thinking about how can we help this region, is fundamental. Can we do it in terms of building more resilience? Can we have financing that gives some insurance? We are going to think about the systemic risk for disasters together. One institution can think about the CAT bonds, the Catastrophe Bonds. Other institutions can think about how we can give some time for the countries to not pay their debt while this happens. I know that the World Bank has announced some suspension. We can think about these things in more general terms. Finally, digitalization is something that, Ajay, you mentioned, and it's very important. For the region, digitalization is about education, which we have chosen, but we have digitalization for health. We think about digitalization for governments. When you asked me-

[Ajay Banga]

What court left out, those were [inaudible]. 

[Ilan Goldfajn]

Those we left out.

[Ajay Banga]

For example, you were talking to me about my experience with financial inclusion. To me, financial inclusion, digitization is an element to part of that, but we've currently not addressed that here. We're trying to focus on learning gaps and access. That doesn't mean that financial inclusion and digitization is not important to our individual institutions. It's just that we've got to pick something, and that's all we are doing. Similarly, in the issue with the Caribbean, we've got the World Bank in Jamaica, we'd launched these Catastrophe Bonds, which are like an insurance in the event of a bad event happening. We've done that for other countries around, but not all of them. We would love to do them for the region of the Caribbean as a whole. We believe that gives people something in their pocket for a bad day. It's not just debt repayment, which we've announced. It's also having financing available for the bad [inaudible], whether through insurance or through deferred drawdown options, things that the bank has been doing in different countries. The question is, can we scale them? Can we learn from each other? Can we do more together? That's the idea.

[Gabriela Frias]

You wanted to add something? 

[Ilan Goldfajn]

No, I wanted to add that what we can do together is not only in the public side, but we're going to talk also about what are we going to do in terms of the private sector together. That's also some part of it, which is very important. And finally, we have our personal experiences. You mentioned financial inclusion. I work at the Central Bank, and financial inclusion is very deep into what I feel proud about what we have done. This is a very important work.

[Ajay Banga]

He was my regulator when he was in Central Bank, so he's gone from being a friend to not such a friend to being a friend again. 

[Ilan Goldfajn]

You see how the regulator will continue to be a friend, and that's a major success-

[Ajay Banga]

Correct. 

[Ilan Goldfajn]

... that you continue to have friends afterwards.

[Gabriela Frias]

In spite of years later.

[Ajay Banga]

The private sector part is an important part. As I said right at the beginning, we're trying to crowd in that money. Without that, there is no way we get to these numbers. Both of us are trying to do it in different ways. In the context of this specific thing, there is an effort between what we call MIGA, which is our insurance guarantee agency, and their work with IDB Invest and our IFC. With IDB Invest and IFC, we have sourcing power. With MIGA, we have the capacity to reduce the risk that is inherent in those projects for the private sector. Not the risk that they should bear of execution, of management, of delivery, but the risks that they do not know how to price and understand. Those risks sometimes will reduce their energy or their desire to play. If we can lay off that risk for them, you remove an unnecessary friction point in attracting private capital. That's what we're trying to do together.

[Gabriela Frias]

I'd just like to add, because we're pressuring time, if you have anything else to add in regards to this new era of collaboration when multilateral development institutions are very much needed, when time is of the essence, what would you like to add? 

[Ilan Goldfajn]

I'll say, Ajay has been very active in that. He has been pushing us for more collaboration. There are several areas that I think are very important. We were there in Jamaica, and Ajay mentioned something very important. We cannot go there to the same people with different standards, with different ways. They're the same people and we keep telling them, "Do it in that way." Somebody else comes 10 minutes later and says, "Let's do it in a different way." We need to have a standard. We need to reduce the burden in terms of our clients. Standards means, for example, procurement. Can we look at the procurement, the way we do it? Can we have a standard for that? And that's a very good place to start. Another thing, how do we measure things? Ajay has been pushing for measuring in terms of climate. We look together. Yes, we do need to look together how we measure that. We need to do other stuff, like credit ratings, together. Because if we are going to go from billions and we need trillions-

[Gabriela Frias]

Yes. 

[Ilan Goldfajn]

And I have an issue with de-risk because risks doesn't disappear.

[Ajay Banga]

Yeah, it's just passed to another place. 

[Ilan Goldfajn]

I like to change to re-risk, probably I won't be able to do it, but re-risk means that we need to talk to the credit rating agencies. We need to talk to everybody, say, "Well, where is this risk going to land and how are we going to deal with it?" All of these issues, we need to work together in this new era. And then we have been asked to do it, and what we're doing today is a response to not only what we want to do, both of us, but what I believe the system wants from us. 

[Ajay Banga]

The topics he raised about us working together on standards, on rating agencies, and on things of that type, he's going to become the head of our informal group of MDBs later this year. He's going to take charge of trying to get these done. I was the one raising them at a recent breakfast, but I'm now giving the pass to him. That's our partnership at work. But the closing thought I'll leave you with is we need all shoulders at the wheel. We need concessional capital from philanthropies and richer countries. We need the private sector to come in for the right reasons. Not that they shouldn't make money, but we need them to come in for the right reasons and with the right risk profile. We need multilateral banks to work together. We need governance in countries to work well together. There's the issue of all shoulders at the wheel, is the message I would leave you with.

[Gabriela Frias]

Well, thank you so much, President Banga. Thank you so much, President Goldfajn. Now let me ask you to get ready to sign the MOU. If you could please help us with setting the table and we can proceed to sign it. 

[Ilan Goldfajn]

This is a new way to do it. The table comes to us.

[Gabriela Frias]

Exactly. Yeah, because it's not ready. While it's ready, maybe let me just remind you that there are people connected in this live transmission. If there's a final message that you want to serve for them? 

[Ilan Goldfajn]

Yeah. While we wait for the table, let me give you a final message.

[Gabriela Frias]

Yes. 

[Ilan Goldfajn]

I like to think about us as the ones that implement stuff, that we go from the talk to the walk. If somebody would like to remember us, remember what we have done and not what we have talked. I think our institutions need to be focused on implementation. There are too many conferences. There are too many seminars. I like to think about us as the ones that will actually take it to the ground with our country strategies, with our representatives, with our connections, with our clients, either the governments or the private sector with IDB Invest, IDB [inaudible]. 

[Ajay Banga]

The only thing I would add to that is that I believe that the World Bank has had a very storied history. It got started for various reasons. They evolved and changed and has built itself over the years into a premier institution, but our future cannot rely on our past. Our world is changing with very severe challenges. Our future requires us to redesign these institutions for the next 30, 40 years to be elemental in driving developmental change, because my grandchild has to enjoy her world as much as I have. I believe in that with all my passion. That's what we have to do.

[Gabriela Frias]

Thank you so much. We wish you success in this endeavor, in this new era. 

[Ilan Goldfajn]

Thank you.

[Gabriela Frias]

And now, if you could please proceed to the table to sign the MOU. Thank you so much to both of you. 

[Ilan Goldfajn]

Thank you. 

[audience applauds]

[Gabriela Frias]

Thank you. Thank you, sir. 

[Ilan Goldfajn]

Thank you, Gabriela.

[Gabriela Frias]

Thank you. Please go ahead. Just a reminder that this is a historic moment, as I was telling you before, between the World Bank and the IDB, where both of, please go ahead, where both organizations established their commitment to collaborate and work together for the sustainable development of Amazon region, the Caribbean, and digitalization in Latin America and the Caribbean, including education.

[Ilan Goldfajn]

Very good. 

[audience applauds] 

[Ilan Goldfajn]

And I would like to thank here for Ajay for coming here for this partnership. We couldn't have done it without your support for this historic moment. 

[Ajay Banga]

Thank you. I'm very happy to be here and I'm very happy that it's very few pages in the MOU. So that's a start.

[Gabriela Frias]

Thank you both. 

[Ajay Banga]

Thank you. 

[Ilan Goldfajn]

Very good. Thank you. 

[audience applauds]

[Gabriela Frias]

Please don't [inaudible] our event. Thank you so much. 

[Ilan Goldfajn]

Thank you, Gabriela.

[Gabriela Frias]

Have a good day. 

[Ilan Goldfajn]

Very good.

00:00 Welcome

00:56 How to mobilize more capital to achieve more development

05:19 A different approach as multilateral development banks

08:20 Recent visits of Ajay Banga and Ilan Goldfajn to Peru and Jamaica

11:34 Areas of joint collaboration between the World Bank and the IDB

24:45 Closure and signature of the memorandum