When nations face a fiscal emergency they turn to the International Monetary Fund (IMF). When they need capital to build roads, energy grids, or water sanitation, they go to the World Bank.
Both institutions play essential roles in the international financial system. But Treasury Secretary Scott Bessent believes “mission creep has knocked these institutions off course.”
Earlier this year, Bessent warned that the IMF and World Bank have drifted from their mandates by devoting time and resources to work on climate change, gender, and social issues. On Wednesday, he acknowledged recent course corrections and urged both institutions to continue refocusing on their original mandates.
“At a time when countries around the world are tightening their belts, we should expect the same from public institutions that have been built with and supported by taxpayer money from around the world,” Bessent said this week ahead of both the IMF and World Bank’s annual meetings.
He criticized the board’s “ballooning salaries” and expanding administrative overhead, urging the institutions to impose financial discipline. “Resources must not be siphoned away from the core missions,” he added.
Part of that mission involves refocusing the IMF and World Bank’s relationship with China.
Last week, China sent a letter announcing large-scale export controls taking effect on November 1. President Donald Trump said the export controls would be on “virtually every product they make“ and “affect all countries.” He condemned the policy as a “moral disgrace” and responded with a threat to raise tariffs to 100% on all Chinese imports.
Bessent, echoing Trump’s concerns, urged the IMF and the World Bank to take another look at China.
“The IMF is uniquely positioned to provide bilateral and multilateral economic surveillance that identifies imbalances and risks, facilitates the balanced growth of international trade, and discourages harmful policies.”
Bessent called the IMF to examine China’s policies, focusing their surveillance “on macroeconomic and financial stability” rather than “climate and gender.”
Addressing the World Bank, Bessent pushed for implementing a graduation policy “supporting countries along the way to self-reliance and enabling the bank to concentrate its resources on poorer, less creditworthy countries where its support is most needed and most impactful.”
Bessent specifically named China as a country that should no longer be receiving World Bank assistance, saying it’s time for the institution to “graduate” China and focus its limited resources where support is truly needed.
Bessent’s stance matters. The United States is the largest financial contributor to both institutions, giving it considerable influence over policy direction and voting power.
The Treasury Secretary’s remarks also mark a sharp change in policy from his predecessor. At the 2024 Annual Meetings of the International Monetary Fund and World Bank, Biden Treasury Secretary Janet Yellen praised the “record high of nearly $75 billion in climate finance to low- and middle-income countries in 2023, a 45 percent increase from 2021.”
“Confronting climate change, of course, remains at the top of our agenda,” she announced. She also supported an expansion of IMF funding through increased quotas.
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