Banga says Trump understands value of international financial institutions

5:21 pm Tuesday, October 15th, 2024

By Andrea Shalal and David Lawder

WASHINGTON (Reuters) -World Bank President Ajay Banga on Tuesday said former President Donald Trump understands the value of international financial institutions and how their lending can lead to expanded markets for American companies overseas.

Banga struck a sanguine tone when asked in a Reuters NEXT Newsmaker interview about the potential consequences for the World Bank should Trump win the Nov. 5 presidential election.

Trump has been a frequent critic of multilateral institutions and their climate change efforts, while proponents of the conservative Republican Project 2025 agenda have argued in favor of U.S. withdrawal from the World Bank and International Monetary Fund.

But Trump has frequently distanced himself from Project 2025.

“President Trump was the one who actually authorized a capital increase in the IBRD (International Bank for Reconstruction and Development) when he was in the office,” Banga said, referring to the World Bank’s main lending arm.

“At the end of the day, he understands the value, if you can put it in the terms that make sense for what he’s trying to get done, for his administration’s policies,” he added.

Trump’s administration backed a $13 billion World Bank capital increase in April 2018 that boosted China’s shareholding and voting power, but that came with lending reforms that raised borrowing costs for China and other middle-income countries.

DEVELOPING MARKETS

Banga said Trump knows there are very few other institutions that can take $1 of government money and multiply it four or 10 times for development lending that can help develop new markets for U.S. and other international companies.

“And he understands the power of leverage in delivering greater value for that dollar,” Banga said. “At the end of the day, if by doing the right development overseas, we can help to drive markets for American companies, that’s great. If we can help to ensure that European companies benefit, that Indian companies benefit, this is good because it creates the links that you want.”

The World Bank’s work to create jobs in borrowing countries also can help prevent future migration and refugee crises, said Banga, an Indian-born American citizen and former Mastercard CEO who was nominated to the World Bank’s top job by President Joe Biden.

“And so I think finding ways to ensure that we as a bank can answer the cause of development in different parts of the world is something that transcends one administration or the other,” Banga added.

(Reporting by Andrea Shalal and David Lawder; Editing by Andrea Ricci)