Bank of England Governor calls for ongoing US support for IMF, World Bank

LONDON: During an interview with the BBC, the Governor of the Bank of England, Andrew Bailey, highlighted the importance of continued US backing for the International Monetary Fund (IMF) and the World Bank. He expressed his concern about potential shifts in the Trump administration’s stance on these critical global financial institutions and said he was closely monitoring developments, particularly in light of a recent executive order from the White House that mandates a review of the US’s role in the United Nations and other international organisations.

Bailey highlighted the necessity of supporting multilateral institutions like the IMF and World Bank, stating, “It is very important that we don’t have a fragmentation of the world economy.” He underscored that these organisations play a vital role in maintaining the functionality of the global economy.

Amidst rising worries among finance ministries and central banks worldwide regarding a possible US disengagement from these institutions, there are discussions in Washington about significant changes to the global financial system. A proposed plan known as ‘Project 2025’  developed by individuals who now hold key positions in the White House, suggested the US should withdraw from both the IMF and World Bank and cease its financial contributions.

This plan characterises these institutions as promoting economic theories and policies that contradict American values of free markets and limited government.

Also read: USAID places global staff on leave as part of Trump’s purge

Following the executive order, a review of all international organizations with US membership will be conducted to assess whether they align with American interests and how they might be reformed. The outcomes of this six-month review could potentially lead to recommendations for withdrawal, which would be presented to President Trump.

During his first term, officials within Trump’s team voiced proposals to eliminate the IMF at the 2018 Buenos Aires Summit, according to sources in the G20, or Group of Twenty, which addresses global economic and political issues.

Established during the post-World War II Bretton Woods Conference 80 years ago, the IMF and World Bank are key UN agencies, with the US being their largest shareholder. The IMF serves as a last-resort lender for nations facing financial difficulties and conducts economic assessments, while the World Bank provides funding and affordable loans to developing countries to combat poverty and promote development.

Currently, the Trump administration has not appointed personnel for this area, and discussions around development spending are cantered on cuts proposed by Elon Musk’s Department of Government Efficiency, particularly concerning USAID. Some members of the administration are reportedly scrutinizing the World Bank’s loans to China.

In response to questions about the potential for the US to exit the IMF, the organisation emphasized its “long history” of collaboration with various US administrations.