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Economy Moves

Trump to nominate David Malpass as new World Bank chief

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The lender’s executive board, which represents the 189 member nations has the final say in choosing the leader.

Tuesday 05, February 2019

(Bloomberg) --President Donald Trump will nominate senior Treasury official David Malpass to lead the World Bank, according to two administration officials, moving to place at its helm a critic of the development lender and its internationalist principles.

The announcement will be made this week, after Trump delivers his State of the Union address on Tuesday night, according to the officials, who asked not be identified before the nomination was made public. The administration on Monday started reaching out to World Bank member countries to rally support for Malpass’s nomination, one of the officials said.

Malpass has portrayed the World Bank as too big, too inefficient and too reluctant to wean developing countries that have become engines of growth. His public record suggests Malpass may scale back the bank’s ambitions at a time when China has escalated lending to the developing world.

The nomination risks provoking opposition from countries that have defended the existing global order against Trump’s criticisms. It could reignite calls for the bank to break with tradition and appoint a non-American in a recognition of the growing clout of emerging markets such as China and India.

Malpass, 62, joined Trump’s campaign early as an economic adviser. As undersecretary of international affairs at the Treasury, he has enthusiastically supported the president’s agenda of tax cuts and deregulation to bolster economic growth.

Additionally, Malpass held senior posts at the Treasury and the State departments under Ronald Reagan and George H. W. Bush. He served as chief economist at Bear Stearns, an investment bank that collapsed during the global financial crisis.

The World Bank was conceived during World War II at a conference in Bretton Woods, New Hampshire, that also spawned the International Monetary Fund. Treasury official Harry Dexter White and the British economist John Maynard Keynes were the chief architects of the two institutions, which underpinned the post-war economic order.

The bank’s original purpose was to finance the reconstruction of Europe. But under Robert McNamara, who led the bank from 1968 to 1981, it shifted its focus toward financing development in the world’s poorest countries, a mission it maintains to this day.

The US is the World Bank’s largest shareholder. Under an informal trans-Atlantic pact, an American has always run the institution, while the managing director of its sister institution, the International Monetary Fund, has always been European.

Some experts say it’s time to end the arrangement. “The changing global economic landscape makes the convention outdated. There are many excellent potential candidates across the globe, just as there probably are in the US,” former US IMF executive director and Treasury official Mark Sobel said in a recent article.

TAGS : President Donald Trump, David Malpass, The World Bank, IMF

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