World Bank mobilizes $112 billion as AI costs rise

The World Bank mobilized $112 billion in capital during the last fiscal year, a figure that is roughly three times higher than the amount recorded three years ago.

President Ajay Banga said on Tuesday that the availability of funds remains stable even as artificial intelligence drives up borrowing costs. He dismissed concerns about tight liquidity during an interview on CNBC's "Squawk Box," stating, "It's not really an issue."

Banga acknowledged that investors might worry about circular financing and the specific business models associated with AI. However, he argued that emerging markets are not facing the same hesitation. He explained that these nations focus their investments on physical infrastructure, such as bridges and roads, while also adopting smaller-scale AI applications.

By contrast, developed nations seek funding for large use cases, which Banga described as the "exact opposite" need. He noted that the private capital overseen by the World Bank does not flow directly to governments. This structure helps the organization avoid looming debt crises and issues related to rising bond yields in certain countries.

Banga maintained his belief that AI will be transformative and profitable, though he admitted that everyone sees bumps in the road. He added that no one knows when the next bump will come. His comments arrive ahead of a series of interest rate decisions from central banks worldwide. Policymakers are currently assessing how widespread AI adoption affects demand for capital and employment. The institution, founded in 1944, aims to end poverty through global funding partnerships. Banga previously served as vice chair at General Atlantic and CEO of Mastercard.

The World Bank's performance stands out against a backdrop of global monetary policy adjustments. Central banks are actively gauging the impact of new technologies on economic stability. Banga's assessment provides a data point for these ongoing deliberations.