In remarks to the Institute of International Finance on Wednesday, Treasury Sec. Scott Bessent detailed reforms he wants from the IMF and the World Bank.
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00:00United States continues offering security guarantees and open markets, then our allies
00:06must step up with stronger commitments to shared defense. The initial actions from Europe on
00:12increased fiscal and defense spending are proof that the Trump administration's policies are
00:19indeed working. The Trump administration and the U.S. Treasury are committed to maintaining
00:26and expanding U.S. economic leadership in the world. This is especially true at the international
00:33financial institutions. The IMF and World Bank serve critical roles in the international system
00:41and the Trump administration is eager to work with them so long as they can stay true to their
00:48missions. And under the status quo, they are falling short. The Bretton Woods institutions
00:55must step back from their sprawling and unfocused agendas, which have stifled their ability to
01:01deliver on their core mandates. Going forward, the Trump administration will leverage U.S. leadership
01:08and influence at these institutions and push them to accomplish their very important mandates.
01:16The United States will also demand that the management and staffs of these institutions
01:22be accountable for demonstrating real progress. I invite all of you to join us in working to refocus
01:30these institutions on their core missions. It is in our collective interest to do so.
01:38The IMF. First, we must make the IMF the IMF again. The IMF's mission is to promote international
01:47monetary cooperation, facilitate the balanced growth of international trade, encourage economic growth,
01:55and discourage harmful policies like competitive exchange rate depreciation. These are crucially
02:01important functions to support the U.S. and global economies. Instead, the IMF has suffered from
02:09a mission creep. The IMF was once unwavering in its mission of promoting global monetary cooperation
02:18and financial stability. Now it devotes disproportionate time and resources to work on climate change,
02:26gender, and social issues. These issues are not the IMF's mission. And the IMF's focus in these areas
02:35is crowding out its work on critical macroeconomic issues. The IMF must be a brutal truth-teller and not just
02:45to some members. Today, the IMF has been whistling past the graveyard. Its 2024 external sector report was
02:57entitled, Imbalances Receding. This Pollyannish outlook is symptomatic of an institution more dedicated
03:05to preserving the status quo than answering the hard questions. Here in the United States, we know we need
03:13to get our fiscal house in order. The last administration ran up the largest peacetime deficit in our nation's
03:22history. The current administration is committed to fixing this. We are open to critique, but we will not
03:30abide the IMF failing to critique the countries that most need it, principally surplus countries. In line with its core
03:40mandate, the IMF needs to call out countries like China that have pursued globally distorted policies and opaque
03:48currency practices for many decades. I also expect the IMF to call out unsustainable lending practices by certain
03:56creditor countries. The IMF should push more proactively official bilateral lenders to come to the table early to work with
04:08borrower countries to minimize periods of debt distress. The IMF must refocus its lending on addressing balance of payment
04:19problems, and its lending should be temporary. When done responsibly, IMF lending is at the very core of its contribution to the global
04:30economy. When markets fail, the IMF steps in and makes resources available. In exchange, countries implement economic reforms to
04:42resolve their balance of payments issues and support economic growth. The reforms undertaken during these programs are some of the IMF's most
04:53important contributions to a strong, sustainable, and balanced global economy. Argentina is a fitting example. I was in Argentina earlier this
05:06month to demonstrate the United States' support for the IMF efforts to help the country reset financially.
05:15Argentina deserves the IMF's support because the country is making real progress toward meeting financial benchmarks, but not every country is so deserving. The IMF must hold countries accountable for implementing economic reforms, and sometimes, sometimes, the IMF must hold countries accountable for implementing economic reforms.
05:29The IMF needs to say no. The organization has no obligation to lend to countries that fail to implement reforms. Economic stability and growth should be the markers of the IMF's success, not how much money the institution lends out.
05:54World Bank. World Bank. Like the IMF, the World Bank must be made fit for purpose again. The World Bank group helps developing countries grow their economies, reduce poverty, increase private investment support, private sector job creation, and reduce dependence on foreign aid. It offers transparent and affordable long-term financing for countries to
06:24invest in their own development priorities. The Bank, along with the fund, provides extensive technical support to promote debt sustainability among low-income countries, which empowers those countries to stand up to coercive and opaque lending terms from other creditors. These core functions of the World Bank complement the Trump administration's efforts to foster safer, stronger,
06:54and more prosperous, and more prosperous economies in the United States and more prosperous economies in the United States and the world.
06:59But the Bank, like the IMF, has strayed in certain respects from its initial mission. The Bank should no longer expect blank checks for vapid, buzzword-centric marketing accompanied by half-hearted commitments to reform.
07:15As the Bank returns to its core mission, it must use its resources as efficiently and effectively as possible. And it must do so in ways that demonstrate tangible values for all member countries. The Bank can use its resources more efficiently now by focusing on increasing energy access.
07:37Business leaders the world over identify unreliable power supply as one of the primary impediments to investment. The World Bank and African Development Bank's Joint Mission 300 initiative to expand energy access to 300 million more people in Africa is a welcome effort.
08:00But the World Bank must respond to country's energy priorities and needs and focus on dependable technologies that can sustain economic growth rather than seek to meet distortionary climate finance targets.
08:16We applaud the recent announcement that the World Bank will seek to remove prohibitions on support for nuclear energy, which could revolutionize energy supply for many emerging markets.
08:31We encourage the Bank to go further in giving countries access to all technologies that can provide affordable baseload generation.
08:40The World Bank must be tech-neutral and prioritize affordability and energy investment.
08:48In most cases, this means investing in gas and other fossil fuel-based energy production.
08:55In other cases, this may mean investing in renewable energy coupled with systems to help manage the intermittency of wind and solar.
09:05The history of humanity teaches a simple lesson.
09:09Energy abundance sparks economic abundance.
09:14That's why the Bank should encourage an all-of-the-above approach to energy development.
09:22Such an approach will make World Bank financing more effective, and it will reconnect the Bank to its core mission of economic growth and poverty alleviation.
09:34In addition to increasing energy access, the World Bank can use its resources more effectively by starting to apply its graduation policy.
09:46This would allow the Bank to focus on lending to poorer, less credit-worthy countries.
09:53This is where World Bank support makes the biggest difference for poverty and growth.
09:58Instead, the World Bank continues to lend every year to countries that have met the criteria to graduate from World Bank borrowing.
10:07There is no justification for this continued lending.
10:12It siphons off resources from higher priorities and crowds out the development of private markets.
10:18It also disincentivizes countries' efforts to move away from dependency on the World Bank and toward job-rich, private-sector-led growth.
10:30Going forward, the Bank must set firm graduation timelines for countries that have long since met the graduation.