Trump Nominee Malpass Appointed World Bank Group President

by Ike Obudulu Posted on April 5th, 2019

President Donald Trump’s choice to be the next World Bank president, David Malpass, was formally approved on Friday by a unanimous vote of the bank’s board of executive directors in Washington.

Mr. Malpass—previously the undersecretary of the Treasury for international affairs and a critic of the World Bank—will take office on April 9, just in time for a gathering of the world’s finance ministers and central bankers in Washington for the spring meetings of the bank and the International Monetary Fund.

Senior U.S. Treasury official David Malpass appointment as president of the World Bank Group, places a loyalist of President Donald Trump at the helm of the development lender.

Malpass was unanimously selected to serve a five-year term from April 9, the World Bank’s executive board said in a statement on Friday.

Trump nominated Malpass in February, choosing a loyal supporter who had been sharply critical of China and called for a shakeup of the global economic order. Critics including Nobel laureate Joseph Stiglitz questioned the selection, pointing to Malpass’s doubts about international cooperation.

But no other countries proposed any candidates to challenge Malpass, making his selection by the board all but assured.

Before his nomination, Malpass portrayed the World Bank as too big, inefficient and reluctant to cut funding for developing countries that grow into dynamic emerging markets. He pushed the bank to lend less to China, arguing the world’s second-biggest economy has the financial resources to support itself.

Since being nominated, Malpass has adopted a gentler tone, noting he was America’s lead negotiator on a package of reforms under which the bank will receive a $13 billion capital increase. Under the plan, the bank will focus more lending on lower-income countries.

Malpass succeeds Jim Yong Kim, who stepped down Feb. 1 to join an investment firm. Kristalina Georgieva, chief executive officer of the bank, has been acting as the interim president.

The position of World Bank president has historically gone to an American, while a European has led its sister organization, the International Monetary Fund. Some observers have called for the bank to break with tradition and appoint a non-American in recognition of the growing clout of emerging markets such as China and India, and the lender’s focus on development.

Malpass, 63, had served as Treasury undersecretary for international affairs under Trump. In that role, he represented the U.S. at international economic gatherings including Group of 20 summits and the IMF and World Bank meetings.

He’s previously held senior posts at the Treasury and 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.

In a note to World Bank employees on Friday, Mr. Malpass, 63, said the organization was capable of “measurable successes” like raising median incomes, improving debt transparency and increasing private-sector development. He urged the bank’s staff to “work tirelessly” toward “a stronger, more stable global economy for all.”

The mission of the bank, which was created in 1944 and is collectively owned by nearly 200 countries, includes reducing global poverty, providing financial aid to needy countries and fighting the effects of climate change. Last year, it provided $20.5 billion for projects involving renewable energy, agriculture and emissions management.

The bank’s priorities are in many way at odds with those of Mr. Trump, a vocal climate change skeptic who has also adopted a tough stance on countering China’s economic prowess, especially in the areas of trade and competition.

Because Mr. Malpass, a former Bear Stearns economist, has questioned World Bank practices like lending money to China, Brazil and other relatively wealthy countries, many people saw his nomination as a sign that Mr. Trump hoped to bend the bank to his views.

But Mr. Malpass has struck a conciliatory tone in recent meetings with dozens of world leaders, an indication that he might not run the bank in lock step with Mr. Trump’s wishes. In an interview last month, he suggested that he was inclined to maintain the spirit of the bank’s existing policies on China and the environment.

Still, Mr. Malpass, who has been deeply involved in the Trump administration’s trade negotiations with China, might seek to scale back the bank’s lending to the country, or at least try to pressure Beijing to be more transparent about the financing of its One Belt, One Road infrastructure initiative.

Steven Mnuchin, the Treasury secretary, said in a statement that Mr. Malpass was an “ideal fit” for his new role. The bank has traditionally been led by an American, although other countries can offer candidates. In this instance, none did.

Image: David Malpass, center, at the White House in February when President Trump announced his nomination to lead the World Bank.

Author

Ike Obudulu

Ike Obudulu

Versatile Certified Fraud Examiner, Chartered Accountant, Certified Internal Auditor with an MBA in Finance And Investments who has both worked for and consulted with some of the world's largest companies on main street and wall street in over 20 countries, Ike brings his extensive reporting and investigations experience to bear on his role as Chief Editor.
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