Washington (AFP) – The International Monetary Fund and the World Bank “must be made fit for purpose again,” US Treasury Secretary Scott Bessent said Wednesday, arguing the institutions should be promoting economic growth instead of social issues. Speaking on the sidelines of the organizations’ spring meetings in Washington, Bessent said the IMF devotes “disproportionate time” to climate change, gender, and other social topics.
“The Trump Administration is eager to work with them — so long as they can stay true to their missions,” Bessent said, adding that the IMF should concentrate on global monetary cooperation and financial stability. The World Bank, he said, should focus on core functions like helping developing countries grow their economies, lower poverty and boost private investment.
Bessent’s comments come amid concerns that Washington might pull back from the fund and the bank. In a briefing with reporters after his speech Wednesday, Bessent said that he has had meetings with IMF chief Kristalina Georgieva and World Bank President Ajay Banga, and that his remarks on Wednesday were “not a surprise for them.” “I think that they are good leaders, and I hope that they will earn the confidence of the administration in the coming months through their actions,” Bessent added.
While the IMF and World Bank serve critical roles in the global economy, “under the status quo, they are falling short,” Bessent said in his speech. He added that they “must step back from their sprawling and unfocused agendas.” Bessent called on the IMF to be tougher with borrowers, saying the fund “has no obligation to lend to countries that fail to implement reforms.” “Economic stability and growth should be the markers of the IMF’s success — not how much money the institution lends out,” he said.
An IMF spokesperson told reporters that the fund looks forward to furthering engagement with the US government. On the World Bank, Bessent said the group should also “no longer expect blank checks for vapid, buzzword-centric marketing accompanied by half-hearted commitments to reform.” He noted that the bank could use resources more efficiently by helping emerging countries boost energy access, saying they should focus on “dependable technologies” rather than seeking out “distortionary climate finance targets.” This could mean investing in gas and other fossil fuel-based energy production, he said.
He also lauded the bank’s recent efforts toward removing restrictions on support for nuclear energy. He urged for “graduation timelines” too, calling it “absurd” for China to still be considered a developing country. Bessent said he was not concerned about the IMF slashing its US growth outlook. He expects greater clarity on tariffs around the third quarter of the year, and said effects of deregulation should also begin kicking in around the same time.
© 2024 AFP
