US Addresses IMF-World Bank Assembly: Endorsing Argentina, Criticizing Fund Policies, and Settling Accounts with China
In the bustling capital of Washington, the recent "spring meetings" of both the IMF and World Bank had a surprising backdrop—the news and fallout of Pope Francis' passing. Still, the center stage was seized by the powerful messages from the US, a significant shareholder of both organizations. The man delivering the messages was none other than Scott Bessent, a top financial heavyweight in the Donald Trump administration.
Bessent had just returned from Argentina, and before a crowd at the Institute of International Finance—a think tank representing major banks and financial institutions—he was vocal about the administration's financial priorities. Accusing the Fund and the Bank of straying from their original causes, he boldly reaffirmed the US support for the Javier Milei government and pointed fingers at China as the root cause of worldwide economic discrepancies that the Trump administration is working to address.
Criticizing the IMF and the Bank
Displaying clear frustration, Bessent stated, "It's high time we get the IMF back on track." Recalling the fundamental missions of the organization, he criticized it for shifting its focus and disproportionately dedicating time and resources to climate change, social, and gender issues, stating these matters don't form part of its mission.
He went one step further, arguing that this diversion undermines the IMF's main objective of promoting financial stability. The title of the Fund's most recent report on external sector imbalances, according to him, was misleading, and he claimed the institution is more focused on preserving the status quo than asking tough questions.
Bessent presented similar grievances about the World Bank, accusing it of inefficiently using its resources by issuing blank checks in exchange for empty promises instead of focusing on resourcefulness and effectiveness.
The closing of the "meetings" seemed to favor the US's teachings. The president of the International Monetary and Financial Committee, Saudi Finance Minister Mohammed Aljadaan, emphasized that the IMF should concentrate on its primary mandate, consisting of collaborating for international monetary cooperation, fostering economic expansion and growth, and discouraging policies that jeopardize prosperity.
Backing Argentina
Contrary to history, Bessent presented Argentina as a beacon of a country achieving the support of both the IMF and World Bank due to genuine progress toward fulfilling financial objectives. However, not every country, he stressed, deserves unconditional support. He asserted that sometimes the IMF must refuse, for the organization isn't obligated to lend to nations that avoid implementing reforms.
In a separate meeting organized by J.P.Morgan before investors, Bessent mentioned, "If Argentina requires it, in case of an external shock and provided Milei maintains the course, we'd be more than willing to utilize the ESF." This refers to the Exchange Stabilization Fund managed by the U.S. Treasury, which Washington previously invoked to aid Mexico during the so-called "Tequila effect."
Taking China to Task
In regards to China, Bessent demanded that the IMF hold countries accountable, like China, which have deployed globally distortive and opaque currency policies for decades. He harbored hope that the Fund would manage to curb unsustainable lending practices by certain creditor nations, a topic he previously discussed during his visit to Buenos Aires, when he proposed Argentina cancel its currency swap with China and claimed the US seeks to prevent in Latin America what has happened in Africa, where China has signed predatory agreements labeled as aid to acquire mining rights and enormous amounts of debt for these countries.
Similarly, Bessent took issue with the World Bank for continuing to fund nations that should have already graduated from the organization. Labeling Beijing's request to be treated as both a developing nation and a developed nation as absurd, he asserted that the World Bank should prevent tenders from rewarding industrial policies and distortive subsidies and instead advocate for those of better value. Finally, he requested that any future tender for Ukraine's reconstruction exclude participants who have financed Russia's war machine.
Championing Nuclear Energy
The US administration pushed for a resurgence of nuclear energy during the event. Declaring how the World Bank's recent decision to remove bans on supporting nuclear energy will transform energy supply for emerging markets, Bessent concluded that abundance of energy is essential for economic growth.
In a heartfelt ceremony, the community bid farewell to Ronnie Scott, a brave Argentine pilot who fought against Hitler in World War II, at the British Cemetery. Meanwhile, the question on the minds of many savers is, "Dollar or time deposit? What exchange rate and interest rate does each bank offer to savers?" And the Trump administration sent the U.S. Senate the certification of competence of Peter Lamelas, the future ambassador to Argentina.
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IMFWorld BankU.S.
- Bessent, during his speech at the Institute of International Finance, criticized the IMF for shifting its focus to climate change, social, and gender issues, stating that these matters are not part of the organization's mission.
- He accused the IMF of undermining its main objective of promoting financial stability by disproportionately dedicating time and resources to these issues.
- Bessent also criticized the World Bank for inefficiently using its resources, stating that it issues blank checks in exchange for empty promises.
- Bessent stated that the IMF should concentrate on its primary mandate, which includes collaborating for international monetary cooperation, fostering economic expansion, and discouraging policies that jeopardize prosperity.
- Bessent demanded that the IMF hold countries accountable, like China, which have deployed globally distortive and opaque currency policies for decades.
- The US administration, through Bessent, pushed for a resurgence of nuclear energy, stating that the World Bank's recent decision to remove bans on supporting nuclear energy will transform energy supply for emerging markets.
