What will become of the World Bank if Trump prevails, asks ALEX BRUMMER

THE spacious headquarters of the World Bank and the International Monetary Fund (IMF) are separated from the White House by just a few city blocks.

Yet, eighty years after these institutions were established, there is often tension in the relationship between the US and the two institutions established in Bretton Woods in 1944.

The US largely ignores the Fund’s advice on economic policy.

This week’s guidance on cutting borrowing and debt to create fiscal buffers for future shocks is being ignored by both US presidential candidates Kamala Harris and Donald Trump.

Both are likely to rely on the resilience of US productivity and demand for the dollar to see them through.

Technically, the World Bank is the baby of the US. It is a long tradition that the US chooses the president of the World Bank and the Europeans choose the director of the IMF.

The choice of the president of the World Bank is deeply political. None more so than in 2023 when David Malpass, a Trump pick, resigned after a fabricated row over alleged disparaging comments about climate change.

His successor, former credit card maestro Ajay Banga, a Biden appointee, has done a remarkable job keeping the US on board.

Normally, when US officials choose to make public appearances at the IMF, it is before or after a meeting of the G7 Western finance ministers.

So it was a rare moment to see Treasury Secretary Janet Yellen, almost certainly in her final months in the role, appear for the great and good of the developing world – in the lofty splendor of the atrium of the World Bank headquarters – to to express effusive praise. on Banga’s stewardship and advocating for development, climate change and reducing debt dependence on poorer countries.

It is unclear how useful Yellen’s support will be for the Bank’s work if Donald Trump were to prevail in the upcoming US presidential election.

The Republican candidate is known to be skeptical of all multilateral institutions and the Right-wing Heritage Foundation thought police are advocating at least a 50% cut in US funding.

Still, the Bank avoided attack under Trump’s previous occupation of the Oval Office and even managed to secure new financing for the International Development Association (IDA), which provides concessional aid to poor countries, largely thanks to strong interest from first daughter Ivanka Trump.

World Bank leaders traditionally impress with their anti-poverty rhetoric and pitch.

Former President the late James Wolfensohn made his mark by working with Gordon Brown on debt cancellation. He was also the first president of the Bank to recognize that corruption was an endemic problem in developing countries.

Banga, who works closely with Yellen, has his own very different agenda. He is working on efficiency and trying to reduce lead times for banking programs from an excessively long 19 months to an average of 12 months.

The other breakthrough is to leverage the Bank’s triple ‘A’ rating more widely by involving the private sector.

In her speech, Yellen made much of how Biden’s pick for president better leveraged private sector resources, freeing up some $200 billion in new borrowing capacity over the next decade, plus $60 billion from other sources.

She also made clear that it is no longer acceptable for relatively prosperous countries like India, which has displaced China as the engine of global growth, to receive World Bank loans.

Future relations with China and India should focus exclusively on ‘technical assistance’, for example to better achieve climate change objectives.

At the annual meeting of the IMF and the World Bank, the Bank often seems like a second-class citizen.

The lack of presence is not helped by Banga’s reluctance to engage directly with the media.

He avoids the live press conference, once a centerpiece of meetings, preferring to organize events for member states at the Bank’s headquarters.

Yellen has done her best to support the Bank’s mission. But how durable the bond will prove will largely depend on the outcome of the presidential election.