As the Trump administration imposes deep cuts on foreign aid and renewable energy programs, the World Bank, one of the most important investors in energy projects in developing countries, is asking whether the largest shareholder, the US, will board I'm facing doubts.
The Trump administration has expressed neither support nor antipathy for the banks, but has issued an executive order pledging to review the US involvement in all international organizations. Also, Project 2025, a right-wing blueprint to overhaul the federal government, calls for a withdrawal from the World Bank.
Two credit rating agencies have warned in recent weeks that banks will lose their triple-A credit ratings if the US withdraws. It can significantly reduce your ability to borrow money. Approximately 18% of the bank's funds come from the United States.
In an interview, Ajay Banga, president of the bank, said his agency is fundamentally different from aid agencies such as USAID. And he used some of the administration's own points to argue the case. Investments in natural gas and nuclear power are good, and bank-funded development projects help prevent migration.
He also said that banks are making money and should not be considered charity from US taxpayers.
“The World Bank is profitable,” he said. He said that even though most of the projects are designed to provide slim returns, it is more than covering its own management costs. “We don't take money from taxpayers every year to subsidize us and our salaries.”
Concerns about the future of the banks are rising as the second Trump administration doubles its rejection of climate projects and encourages accelerated expansion of US oil and gas projects.
The US has a great influence on banks and effectively selects its leaders. David Malpass, who was appointed President Trump in 2019, doubled the bank's climate funds. However, he resigned shortly after the shaking of a 2023 public event in the New York Times about whether he embraced the scientific consensus that fossil fuels promote climate change.
Banga was subsequently nominated by President Biden in 2023. He committed to channeling 45% of the bank's funding on climate-related projects, up 10 percentage points from his predecessor.
Founded in 1944 to rebuild postwar Europe, the World Bank is the world's largest multilateral lender. It funds a variety of projects for poor countries and emerging economies, including developing high-yield crop species, installing school roofs that can withstand cyclones, building roads, bridges, and all kinds of energy projects. .
Banks have long been criticised by environmental advocates who support projects that harm communities and ecology, such as hydroelectric power generation and gas pipelines.
Banks face immediate problems. In December, Congress approved the Biden administration's pledge to provide $4 billion in grants and loans to the world's poorest countries through banks. But the new Republican-controlled Congress must agree to include an annual tranche of that money in its budget.
Banga said he hopes the money will pass as part of the usual country-to-bank transfer process. He also said he met with lawmakers in Congress and some current administrative authorities before they took their posts, but refused to say who.
The Treasury did not respond to requests for comment, and there was no Senate Budget Committee, currently managed by Republicans. The Republican-controlled House Financial Services Committee declined to comment.
However, banks also face more existential problems. The Trump administration will continue to support the institution. If so, they would support Banga's goals to guide almost half of that money and help developing countries adapt to the risks. Would you like to build an energy system that warms the planet and doesn't contribute to climate change?
Banga said he didn't know what the administration's plans were. He hasn't even discussed directly by anyone in the White House yet, nor has he discussed directly with Elon Musk about his role in searching for ways to significantly reduce government spending.
“Who knows what to decide tomorrow? I'm trying to show them – I've been showing this for the past two years – what I'm going to help you is what I do. Or,” he said. “What I'm doing is I'm taking your dollars and multiplying them.”
Kevin Gallagher, director of the Boston University Center for Global Development Policy, said the White House can do one of three things. It could withdraw that money and withdraw. It can be withdrawn, but keeps money in the bank. Alternatively, you could request that the project focus on fossil fuels.
In the current fiscal year, gasoline includes approximately half of the bank's $97 billion investment, compared to about 3% of renewable energy projects. Gas burns cleaner than coal and oil, but the increase in its increase has contributed to the continued increase in global greenhouse gas emissions, a major factor in global warming.
In any case, this week is likely to see uncertainty at the world's largest economic finance ministers' meeting in Cape Town, South Africa.
The themes of this year's G20 conference are “solidarity, equality, and sustainability.” This believes the administration is at odds with its views on climate change and diversity policy. The Times reported last week that Treasury Secretary Scott Bescent would not be attending the meeting.
Developing countries are “certainly preparing quickly to prepare for the US climate fund dropout,” Gallagher said. “Yes, of course, that means they're asking China for more funding.”
Japan and China have the second and third largest stakes in the World Bank after the US, and China wants to broaden its impact.
China's development banks lend $209 billion to energy projects in 68 countries between 2000 and 2023, according to a database managed by the Global Development Policy Center. In contrast, the World Bank provided $43 billion in loans to energy projects.
The US has already been pulled back from its leadership role in a $21.6 billion plan to exchange cleaner energy in Indonesia's coal-burning plants. At this point, approximately $2 billion in US funding is still expected, including $1 billion channeled through the World Bank.
“We see the Trump administration abolishing its commitments every day, so that's what we're worried about,” said Paul Butarbutaru, executive director who organizes Indonesia's Just Energy Transition Partnership. That's what it is.” Other countries including Vietnam and South Africa will move away from fossil fuels.
He has held meetings in recent weeks with not only Chinese, but also Dutch, Spanish, German and other investors. This sees its commitment to green Indonesia's energy network as a major investment opportunity. “There will always be other people who will jump into Indonesia,” he said. “There's a huge private sector interest.”
Banga said “for now” he has not seen any major policy changes to bank energy financing and that his mission is not “saving the bank” from Trump or others. I had a hard time saying that. Shareholder. After all, he says many of the larger stakeholder countries of banks, such as Japan, Germany, South Korea and Canada, have been undergoing a political transition since taking on his role a year and a half ago. Ta.
He also said he saw gas funding as part of the energy transition shared by former gas fracking executive Chris Wright, Trump's energy secretary. “We're doing natural gas as well, because gas is part of the transition,” he said.
“I am not raising funds accurately and therefore I have admitted objections to that policy because I am funding cleaner fuels that will help with the transition,” Banga said.
Asked if he hopes that the bank will continue to invest in climate projects, he said he will explain to lawmakers that the bank is investing in making poorer countries more stable. “I'm not a climate evangelist,” he said. “I'm a man who was just a person.”
