World Bank Chief Malpass to Leave, Creating Biden Opening

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(Bloomberg) — World Bank President David Malpass said he plans to step down by the middle of this year, giving the Biden administration an opening to pick someone to carry out its goal of overhauling the global development lender to focus more on fighting climate change.

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Malpass, 66, whose five-year term was set to run through April 2024, informed the institution’s board of his intentions to depart by the end of the fiscal year on June 30, the Washington-based lender said in a statement Wednesday.

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“The next few months will provide a good opportunity for a smooth leadership transition,” Malpass said in a note to staff seen by Bloomberg News.

A former top international official at the Treasury Department, where he had a reputation as a China hawk, Malpass was nominated to helm the World Bank by then-President Donald Trump in 2019. As head of the anti-poverty lender, he pressured Beijing to provide more debt relief for developing nations and led the World Bank in lending more than $150 billion in response to Covid-19, Russia’s invasion of Ukraine and rising food and energy prices.

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He ran into controversy last year after fumbling a question at a conference on the causes of climate change, fueling calls for his removal amid criticism that he didn’t accept the scientific consensus of the impact of man-made emissions.

Malpass since said he “really wasn’t prepared” when he answered on the sidelines of a United Nations meeting. He then called for expanding the development lender’s mission to explicitly include public goods such as climate change.

Last week, US Treasury Secretary Janet Yellen deepened her call for changes to the World Bank, urging it to more aggressively extend its balance sheet and to work harder at mobilizing private-sector money to help address global challenges like climate change and pandemics.

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“This will be a good opportunity for her to accelerate the bank’s work in implementing that vision,” said Mark Sobel, a former US Treasury official who also represented the US at the International Monetary Fund. “The timing is good for the Biden administration and certainly preferable from that standpoint rather than a drawn out, protracted situation.”

The US traditionally nominates the head of the World Bank, with Europe nominating the heads of its twin Bretton Woods institution, the International Monetary Fund. Names mentioned by analysts as potential Biden administration picks include Samantha Power, head of the the US Agency for International Development, and Rajiv Shah, the president of the Rockefeller Foundation and a former head of USAID.

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Yellen in a statement thanked Malpass for his service.

“While we all must continue to raise our collective ambitions in the fight against climate change, during President Malpass’ tenure the World Bank has made important recent advances in this area” Yellen said. 

She also praised his support for Ukraine, the Afghan people and to help low-income countries achieve debt sustainability through debt reduction.

Malpass had started work on the lender’s evolution roadmap urged by Yellen to help it better address global challenges like climate change and pandemics.

Environmental activists had called for Malpass’s ouster after his gaffe on climate change at the panel discussion in September, saying that he wasn’t providing leadership on the issue.

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“We welcome the departure of a climate and development laggard as the head of a critical international finance institution,” said Jake Schmidt, senior strategic director of international climate at the Natural Resources Defense Council, an environmental advocacy group. “We need World Bank leadership committed to bold action to unleash more and better climate finance to meet the scale of the climate crisis and the needs of developing countries.” 

Before joining the Trump administration, Malpass spent more than a decade as an economist at Bear Stearns Cos. He had served prior Republican presidents and worked as an aide on Capitol Hill.

—With assistance from Jennifer A. Dlouhy.

(Adds background on Malpass in fourth paragraph.)