Emerging markets are the most important challenge for the new World Bank president

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World Bank chief Jim Kim to leave post on Feb. 1, sparking potential succession battle

 

 

 

World Bank President Jim Yong Kim is resigning from his post to join an investment firm. (Salwan Georges/The Washington Post)

By Jeanne Whalen and

David J. Lynch

January 7 at 6:27 PM

Jim Yong Kim is stepping down as World Bank president after more than six years in the post, sparking a succession process that development officials say is likely to be more contested than in years past, when the United States traditionally chose the bank’s leadership.

Kim is leaving Feb. 1 to join a firm involved in infrastructure investment in developing countries, the World Bank said.

Kim, a physician and former president of Dartmouth College, informed the bank’s board on Monday of his decision to leave, surprising bank officials, employees said.

The bank, funded by countries around the world to lend money to developing nations, said Kristalina Georgieva, chief executive of the bank’s two main lending arms, will become interim president.

[Who is Jim Yong Kim?]

The World Bank’s directors, who represent donor countries, have the right to nominate candidates for the president’s job and will vote on a winner.

By an unwritten tradition since the bank’s founding in 1944, the board has always chosen Washington’s nominee. The Europeans in turn have determined the head of the International Monetary Fund.

In 2012, just before Kim was selected for his first five-year term, some countries lobbied for the role to be filled by Ni­ger­ia’s then-Finance Minister Ngozi Okonjo-Iweala or Colombia’s former finance minister Jose Antonio Ocampo.

Washington’s pick “had opponents for the first time in the World Bank selection process,” said Scott Morris, senior fellow at the Center for Global Development and the Treasure Department’s former deputy assistant secretary for development finance and debt.

“I have no reason to think that won’t be the case this time,” Morris said. “This is not 1944, where the U.S. is sort of the acknowledged architect, financier and no question the leading power in this institution. It really is seen as a global institution today, with a global membership,” he said. It “becomes more and more frustrating to have this unbroken chain of American presidents,” Morris added.

Keeping the World Bank presidency in American hands may be even tougher given the Trump administration’s rocky relations with some European allies. “I think it’s going to be a fight,” said Clay Lowery of Rock Creek Global Advisors, who served as assistant treasury secretary for international affairs under President George W. Bush. “It’s going to be a lot harder to get the Europeans to sign off this time.”

The Trump administration has questioned the value of multilateral institutions including the United Nations and the World Trade Organization. But it supported a funding increase for the World Bank last year, which raised $13 billion from member countries.

Development officials credit Kim with helping convince the administration to back the funding increase.

In exchange, the Trump administration got the bank to agree to reforms, including a review of the salaries of board members and staff, which Washington in some cases viewed as excessive. Senior managers this year received no salary increases, according to a bank official who declined to be named to discuss sensitive matters.

[Ivanka Trump and the World Bank have a new idea to help women globally]

The World Bank chief also cultivated ties with Ivanka Trump, working alongside her in 2017 to establish a $350 million fund to support female entrepreneurs in developing countries.

“We appreciate Mr. Kim’s service to the World Bank,” the Treasury Department said in an emailed statement. “The Secretary looks forward to working with his fellow governors in selecting a new leader.”

In a speech last month, Secretary of State Mike Pompeo said the administration was pushing the World Bank and IMF to “halt lending to nations that can already access global capital markets — countries like China.”

Kim oversaw an expansion of the bank’s work into fighting climate change, which the bank did by providing loans to combat coastal erosion and expand sustainable agriculture, home-building and water management.

Early in his tenure, he also undertook a restructuring and cost-cutting effort that caused upset among bank staff, some employees said.

“It has been a great honor to serve as president of this remarkable institution, full of passionate individuals dedicated to the mission of ending extreme poverty in our lifetime,” Kim said in a statement. “The work of the World Bank Group is more important now than ever as the aspirations of the poor rise all over the world, and problems like climate change, pandemics, famine and refugees continue to grow in both their scale and complexity.”

The World Bank said Kim will rejoin the board of Partners in Health, a group he helped found that provides health care in poor countries.

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Sources: Trump will choose a senior official in the treasury to head the World Bank

 

Arab and international Economy News _ Baghdad WASHINGTON (Reuters) - The Bush administration plans to test David Malpas, a senior Treasury official, as a candidate for the United States to lead the development bank, well-informed sources said. The nomination of Malpas, one of Trump's supporters and skeptics in multilateral organizations, is setting the stage for the bank's presidency, which pledged about $ 64 billion to developing countries in the year ending June 30, 2018. Politico, the first to publish the report, quoted unnamed administration officials as saying the decision would be announced on Wednesday. White House spokesmen and the Treasury Department declined to comment. A European diplomatic source said the Trump administration had informed several capitals of Malpas's nomination, adding that European shareholders were unlikely to oppose the nomination. Number of Views 28   Date Added 05/02/2019

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Sources: Trump will choose a senior official in the treasury to head the World Bank

11:48 - 05/02/2019

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Information / Baghdad ..

WASHINGTON (Reuters) - The administration of President Donald Trump has notified shareholders at the World Bank that the president plans to test David Malpas, a senior Treasury official, as a candidate for the United States to lead the development bank, informed sources said Tuesday.

The nomination of Malpas, one of Trump's supporters and skeptics in multilateral organizations, is setting the stage for the bank's presidency, which pledged about $ 64 billion to developing countries in the year ending June 30, 2018.

Politico, the first to publish the report, quoted unnamed administration officials as saying the decision would be announced on Wednesday.

White House spokesmen and the Treasury Department declined to comment.

A European diplomatic source said the Trump administration had informed several capitals of Malpas's nomination, adding that European shareholders were unlikely to oppose the nomination. Ending / 25

https://www.almaalomah.com/2019/02/05/387213/

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Emerging markets are the most important challenge for the new World Bank president

 

 

09 Feb 2019 04:05 PM
Editing: Noha Al-Nahhas

Mubasher : The governments of the world are currently choosing a new president of the World Bank. In doing so, they have to think about the strategic economic context in which the bank should operate.

An article in the Financial Times said that the 10 years following the dramatic events of the global financial crisis have been reviewed in the United States and Europe, but events have rarely focused on developing economies.

So the next World Bank director needs a better understanding of history and has to know what his institution should do now to prepare for the next downside.

If monetary policy makers ignore the experience of developing countries during the crisis, it is intolerable to look at the dynamics of emerging markets, understand the sources of resilience in developing economies, and assess vulnerabilities.

Given the interest given to developing countries in previous crises, it would be ironic to ignore their role during the Great Depression.

The multiple poles of growth are the source of strength for the global economy. In contrast, the collapse in emerging markets is hurting the most needy. Migration to Europe and North America reveals the human losses of all societies in the event of failure in poor countries.

Rescuers realized in 2008 that the world had changed, shifting from the G7 to the G20, and in the wake of financial shocks, developing economies accounted for about half of global growth. Emerging markets led to a recovery in global trade, prosperity.

Developing countries have become the net source of capital to high-income countries, and South-South linkages have gained greater importance, accounting for one-third of world trade and foreign direct investment.

The story of the developing economy presents five lessons that must be addressed.

The first lesson is that emerging markets have not escaped the cost of the crisis. The average growth rate, estimated at 7% in the five years before the crisis, fell to 1.6 % in 2009 , displacing 64million people into extreme poverty.

With the exception of China and India, the average growth rates fell from about 6 % to -2%.

The second lesson is that China's massive stimulus has provided a boost to the deteriorating global economy, especially commodity exporters. Beijing's high debt level today reflects the cost for this course of action.

For policymakers who claim that Beijing is hurting world markets and those who want to separate China from the global economy, they have to take that into consideration.

India and Indonesia also demonstrated strong resilience when needed.

The third lesson is that trade disputes are likely to hurt poorer countries more than financial shocks. International trade has fallen rapidly, falling 30% in the first quarter of 2009 from the previous year's comparison levels. .

The World Trade Organization (WTO) and the World Bank have been forced to pressure central banks of the G- 20 countries not to tighten trade finance.

Current tariff wars, as well as the gradual movement in recent years towards "temporary" trade barriers to intermediate goods as well as fragmentation, would undermine the flexibility required at the time of the next downward trend.

And the fourth lesson , it is that the structural reforms in developing countries before the storm and provided space for financial expansions in a timely fashion, many governments can rely on organized programs of health, education, social safety nets and Infrastructure care Although they had to slow down spending growth.

They have tried to protect the primary productive assets of human capital and skills.

In the face of severe risk re-pricing and the withdrawal of international banks, some countries can mobilize domestic sources of finance, including private investment, because they have developed local currency securities markets and microfinance. Developed countries can help themselves in the future if they help developing economies prepare for today.

In the fifth and final lesson , multilateral development banks complemented the International Monetary Fund's $ 158 billion counter-cyclical support for commitments between July 2008 and December 2009 , of which $ 88 billion were from the World Bank. These policies were stimulated by development banks the money.

These development banks provided important agricultural inputs and prevented the passage of a ban on exports during high food prices in 2008. At the same time, development funds enabled countries to strengthen safety nets and provide innovative financing to vulnerable groups.

The European Bank for Reconstruction and Development (EBRD) and the World Bank have persuaded Western European commercial banks to retain capital in Eastern European subsidiaries, avoiding a reversal of the economic cycle.

Lessons from the global crisis in 2008 extend beyond central bank interventions, bank rescue programs, and regulation and regulation.

When the next downturn or financial crisis occurs, emerging markets are likely to prove more important than at the time of the last crisis.

The next president of the World Bank should help developing countries prepare now.