Scott Bessent, the Treasury Secretary, advocated for significant reforms at the World Bank and the International Monetary Fund (IMF) during a speech at the Institute of International Finance. He criticized these institutions, asserting that they have deviated from their original missions, particularly in their dealings with China.
Bessent stated that while the IMF and World Bank still hold significant value, their goals have become misaligned due to “mission creep.” He noted that the institutions are underperforming and in dire need of reform. Neither the IMF nor the World Bank provided immediate comments on Bessent’s remarks.
Under the current U.S. administration, Bessent expressed a willingness to collaborate with these financial bodies provided they adhere to their foundational missions. He criticized the current agendas of the IMF and World Bank, describing them as vast and unfocused, which has hindered them from fulfilling their primary objectives. For the IMF, these include promoting global macroeconomic and financial stability, and for the World Bank, facilitating long-term economic development and poverty reduction. The U.S. administration intends to leverage its leadership and influence to drive change in these institutions.
Bessent highlighted that the IMF has become sidetracked from its primary mission of fostering global monetary cooperation and financial stability, by investing disproportionate time and resources into issues like climate change, gender, and social matters. He suggested that the IMF should adopt a more critical stance, especially towards countries like China, which he claims have perpetuated globally disruptive policies and non-transparent currency practices for years.
The IMF recently cautioned about an impending global economic slowdown due to uncertainty and trade tensions, projecting negative impacts on U.S. economic growth. Bessent showed openness to criticism, provided there is reciprocity.
Amid fluctuating trade relations, President Trump paused some tariffs following financial market reactions, yet new tariffs on China were introduced. China responded, escalating trade tensions. However, Bessent hinted at a potential “de-escalation” of the trade conflict. Recent indications from Trump suggest the possibility of reducing tariffs on Chinese goods, and reports indicate that the White House may soon lower tariffs on China.
Nonetheless, Bessent maintained that China requires transformation and urged global financial organizations to enforce transparency standards. He criticized the notion of treating China as a developing country within the World Bank framework, pointing out that the bank has deviated from its mission. He commented on the need for the World Bank to avoid seeking unrestricted support without genuine commitments to reform.
