What will turn into of the World Bank if Trump triumphs, asks ALEX BRUMMER

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

Yet 80 years after these institutions were established, there is often tension in the relationship between the US and the two institutions founded at Bretton Woods in 1944.

The US largely ignores the advice of the Fund on economic policy. 

This week’s directions on moving to reduce borrowings and debt to create fiscal buffers for future shocks are being ignored by both US presidential candidates Kamala Harris and Donald Trump. 

Support: Treasury Secretary Janet Yellen lavished praise on Ajay Banga’s stewardship of the World Bank – but how useful would that prove under a Trump presidency? 

Both are presumably relying upon the resilience of American productivity and demand for the dollar to see them through. 

The World Bank technically is the US’s baby. The long tradition is that the US selects the president of the World Bank and the Europeans the managing director of the IMF. 

The choice of World Bank president is deeply political. No more so than in 2023 when David Malpass, a Trump choice, resigned after a confected row over alleged disparaging remarks about climate change. 

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

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

So it was a rare moment to see Treasury Secretary Janet Yellen, almost certainly in her last months in the role, appearing before the great and the good of the developing world – in the soaring splendour of the atrium at World Bank headquarters – to lavish praise on Banga’s stewardship and make the case for development, climate change and reducing dependence on debt among poorer countries. 

It is unclear how useful Yellen’s support for the Bank’s work will prove should Donald Trump triumph in the upcoming US presidential election. 

The Republican candidate is known to be a sceptic about all multilateral institutions and the thought police at the Right-wing Heritage Foundation advocate, at the very least, a 50pc cut in US funding.

Yet the Bank avoided attack under Trump’s previous occupation of the Oval Office and even managed to secure new funding for the International Development Association (IDA), which provides concessional assistance to poor nations, largely due to the keen interest of first daughter Ivanka Trump.

World Bank leaders traditionally make an impact with their anti-poverty rhetoric and pitch. 

Former president the late James Wolfensohn made his mark by working alongside Gordon Brown on debt forgiveness. He was also the first Bank president to acknowledge that corruption was an endemic problem in developing countries.

Banga, working closely with Yellen, has his own very different agenda. He is working on efficiency, seeking to reduce turnaround times for Bank programmes from an inordinately long 19 months to an average of 12 months.

The other breakthrough is to deploy the Bank’s triple ‘A’ credit rating more widely by bringing the private sector on board.

In her address, Yellen made much of how Biden’s choice as president was better harnessing private sector resources, unleashing some $200bn of new lending capacity over the next decade, plus $60bn from other sources.

She also made it clear that it is no longer acceptable for relatively prosperous countries such as India, which has displaced China as an engine of global growth, to be in receipt of World Bank loans. 

Future relations with China and India should focus only on ‘technical assistance’ on how better, for instance, to meet climate change goals.

The Bank often seems like the second class citizen at the IMF/World Bank annual gathering. 

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 centrepiece of the meetings, preferring to host events in Bank HQ for member countries.

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