Transcription
Good morning everyone, and welcome to the 2026 IIAF in conversation series to kick off the IIF spring meetings week events. Tim Adams certainly knows how to throw a party. My name is Michael McKe. I am the international economics and policy correspondent for Bloomberg radio and television. And it's my pleasure to be the host of today's meetings and to welcome you all here.
The Institute of International Finance has curated a remarkable program built around the theme "Deciphering Risks, Defining Opportunities." And this week's sessions are designed to foster candid, substantive dialogue on the forces reshaping global finance, from the diversification of trade and capital flows to policy divergence involving defense priorities and rapid digital transformation. A very full agenda.
We're delighted to welcome a distinguished group of speakers, which, uh, who have, uh, genuinely generously shared their time and expertise. It's wonderful, uh, to have them and to have all of you here. And now, it is my pleasure to introduce Tim Adams, the president and CEO of the Institute of International Finance.
Thank you, Michael. Thanks everyone for coming today. Happy spring to you. As T.S. Eliot said, "April is the cruellest month." I think he suffered from, uh, hay fever and allergies. So if I sneeze while I'm up here, I apologize ahead of time. Uh, last April, Secretary Scott Beston joined us and reaffirmed the U.S. commitment to the Bretton Woods institutions, albeit with a "back to factory settings" mindset. Frankly, I applaud, I applaud both the reaffirmation and of focusing on the essential pieces, the essential mission of those institutions. He also reaffirmed the reserve status of the United States dollar, uh, as the global reserve currency. I think the room at the time breathed a general sigh of relief.
Today, the Secretary is back a year later, uh, to join us on a different topic. It's broadly speaking, a focus on development, human flourishing. Now, we could fill this room with all the research and policy papers published over the past few decades on how to improve the state of humanity globally. Everyone has an opinion. Interesting, living conditions has improved radically. It often doesn't get discussed. The share of global population that lives in extreme poverty has plummeted by 60% from, it was at 60% of the population when I was a young man. It wasn't that long ago. It's less than 10% today. The human, UN Human Development Index has risen steadily since 1990. Global income inequality has actually dropped. Literacy rates and school enrollment has skyrocketed since 1970, and infant mortality rates have plummeted over the past 50 years. The list goes on.
Women and girls' education, women's role in the political systems around the world, access to medicines, access to clean water, electricity has all improved. The question is, how can we accelerate these trends? Personally, I think there are a number of important component pieces, and we're going to hear more about that shortly. But such things as just property rights. I was in Senegal 15 years ago, and I met a mango farmer who wanted to put in place an irrigation system for his mango farm. Unfortunately, he couldn't get the capital to do so because he didn't have title to the land, but the land had been in his family for generations. Simple things that we take for granted. Property rights, access to capital. I can't tell you how many small and medium-sized enterprises I've met throughout Africa or Asia or Latin America. Just simply access to capital. And as the adage goes, "Capitalism without capital is just another ism." Access to markets and trade. Trade creates prosperity. Trade creates and builds wealth. Access to markets and trade. General education, incredibly important. Support for science and dissemination of research. Think of the Green Revolution. Norman Borlaug, many of you in this room maybe don't know who he is. One of the most important individuals in terms of the Green Revolution. He was the father of the Green Revolution. American agronomist who changed the nature of wheat, uh, yields in India but transformed agriculture production globally and raised the level of calories that we consume. Maybe give me too much, the, the amount of calories that are consumed globally. Health and human capital. I also like to note that when I was in the U.S. government, the U.S. Treasury, back in 2003 in the Bush administration, we launched PEPFAR, the President's Emergency Plan for AIDS Relief, which has invested over $120 billion since 2003. It has saved, ladies and gentlemen, 30 million lives. And I'm glad to see that this administration has remained committed to this incredibly important program. It saves lives.
And of course, just simply robust economic growth, private sector capital formation and productivity is a necessary condition for businesses and economies and people to prosper. The kind of work that Citi does, or Standard Chartered, or Revolut, or TIF. We, general prosperity comes from private sector capital formation, from economic growth. It is a necessary, not always sufficient, condition, but you can't have rising living standards without capital formation and economic growth.
So here today, we're going to deepen the discussion with a conversation between Bjorn Lomborg, who runs the Copenhagen Consensus and the author of "How to Spend $75 Billion to Make the World a Better Place." I've had this book on my desk since it was published in 2014. It's a great publication. If you haven't read it, you should. I'm sure Bjorn will give you some copies. Uh, it really is, "How do we do, uh, development and a cost-benefit assessment? How do we get the most bang for our buck?" And that conversation is often missed in this town and other capitals. And of course, we're delighted and honored to have the Treasury Secretary Scott Bessant back today to join us at our spring meetings. So, ladies and gentlemen, please invite to the stage Bjorn Lomborg and Secretary Scott Bessant.
Thank you very much. Uh, and Tim, you kind of took away all our talking points. Um, so, Mr. Secretary, it's great to have a conversation here today about the World Bank and the IMF here at their spring meeting. Uh, the goals of these institutions, of course, is to accelerate global development, uh, drive economic growth, and lift billions of people out of poverty. And these goals remain vitally important. Unfortunately, many development institutions now prioritize Western elite issues like gender, social topics, and climate change over what the world's poorest people need and want: better education, healthcare, and reliable energy. Nowhere is this disconnect more clear than in their climate fixation. Uh, in the latest year, 48% of the World Bank's financing went to so-called climate finance, up from 44% the year before and exceeding their own, uh, 45% target. I suspect the reason why, uh, uh, elites are so climate-focused is because they correctly see the poor as more vulnerable to climate impacts. But remember, poor people are more vulnerable to every impact. They're more vulnerable to disease, to hunger, to bad education, to corruption. The World Bank and the IMF need to get back to making rational priorities. For instance, using cost-benefit analysis, as, uh, Tim also just mentioned. These organizations used to lead the world in cost-benefit analysis. As I've argued for a long time, and the reason I think we're having this conversation now is that we need to scrap these climate targets and get the World Bank and IMF back to their core missions. In your speech here last year at the IIA, sorry, the IIF, uh, you made this exact point and you called on the World Bank and the IMF to refocus on their core missions. In your view, how has the bank and the fund, uh, responded and what more do they need to do?
Well, be thank you and good, good to be back here a year later to talk a little about a report card for the multilateral banks. And also, uh, the, the U.S. leads the G20 this year, and I can tell you that our, uh, agenda is growth. We believe in the U.S. that the biggest risk to financial stability is a lack of growth. When I look at the choices, say, that Europe has made, that the unable to follow the Draghi report from Mario Draghi on how to increase growth. The, the EU was originally the European Economic Union, and it was meant to facilitate trade among the members, make it more seamless, uh, create more prosperity, and it turns out that it's probably, uh, been, been a hindrance. In terms of the IMF and World Bank, uh, I, I'm informed by, um, Grace Hopper, who was the first female admiral in the U.S., who was a big fan of it. She has some great sayings. Two of them: One is, "The most dangerous words in the English language are, 'Because we've always done it that way.'" And the second is, "The way to get things done is to get things done." And I think we need to step back and look at the IMF and World Bank, their core missions. The IMF, I believe, is global financial stability and stabilizing on the, uh, countries that are in bad equilibriums and getting them back to a sustainable path, an economically sustainable path. The World Bank is to pull people out of poverty. And we cannot have, as, uh, Tim said, these kind of elite beliefs, the, get, get in the way. And I, if we think about, I, I go back and I think a lot about this Nature magazine article that came out in April of 2024 that became the guiding principle for so much of the climate beliefs that, you know, GDP was going to be 60% lower by the by the turn of the century. And then so it was the gospel for 18 months, and then it was refuted. So, every, everything was based on that. So, you know, I, I don't think that we can have this kind of short-termism. I think we have to stick with core principles. And I, I do think we, we are starting to see at, at the World Bank. Uh, they are starting to take more, uh, for energy abundance and all-of-the-above tact. They have now gotten on board with nuclear energy. I'm not sure why, uh, it ever went away. And then the, the IMF, I think, um, needs to lead by example, probably get rid of their golf course out in Maryland, uh, and, uh, which I said last year, and, uh, focus on global imbalances. Because I can tell you, this slow-motion buildup of global imbalances, uh, after a lack of sustainable growth, it is the, the, the biggest risk. The, the world cannot take a China with a trillion-dollar trade surplus.
And I think you're absolutely right. And one of those points that we, we believe somehow that climate is so important that we need to do everything. That, you know, the, the Nature study that you mentioned that suggests that we could lose 60% of global GDP if we didn't fix climate change, which later turned out to be wrong. Uh, but of course, the point is, if that was really true, it should have been rich countries spending rich country money on dealing with climate change. But that's not what's happening. It's mostly rich countries deciding to spend poor people's money through the World Bank and the IMF badly. And this is not what the, uh, the world's poor are telling us that they want. So, I, I had the fortune to work together with Nobel laureate, uh, Tom Schelling, and he often asked the very simple question: "How do you best help poor people?" Through development policy or through climate policy? Remember, climate policy costs hundreds of trillions of dollars and it shaves off a tiny fraction of a degree in a century's time. Development policy, like avoiding death, costs just billions or maybe even just millions of dollars and saves lives right now. And that, of course, is why development policy often is much, much better if you actually want to help poor people. And of course, it also builds much more resilience. Look, a hurricane that hits poor Haiti kills hundreds of people. The same hurricane hitting rich Florida kills virtually no one because prosperity protects people. And so we need to get this conversation back, and I think this is exactly where the IMF and the World Bank needs to get back to their core missions.
I, I think it has to be resiliency, supply chains. Again, I think, you know, both the IMF and the World Bank have an important role in understanding this, uh, debt loop and downward spiral that many countries are in. Several countries, one in particular, have done the equivalent of a loan-to-own program with a lot of these countries, and there's a lot of undisclosed, uh, debt. There are a lot of tolling arrangements that are unfortunate, and I think only the, these multilateral banks can effectuate that. But, you know, again, I, I do want to congratulate them. Uh, the, the IMF was willing to say, "This time is different" with Argentina, and Argentina's been a fantastic success. They're accumulating reserves every day as we speak. Tens of millions of people there that are, are being brought out of poverty. The government of Javier Milei, I'm very interested to see. It was the poorest, the poorest elements of Argentine society who voted for him this time around, and the young people.
So, there's optimism there. And then, you know, the IMF is working on bringing, uh, Venezuela back into making, making it look more like a normal economy, and I think will play a very, very, uh, important role there. And the World Bank leadership in terms of energy and unlocking resources and, uh, stability for the, the very poorest countries, I, I think is, is back on a good trajectory.
Yeah. If you don't mind, I'll, I'll pick you up on that energy point. Because last October, uh, you withdrew the United States from the Green Climate Fund, uh, because, in your words, "Their goals run contrary to the fact that affordable, reliable energy is fundamental to economic growth and poverty reduction." A, and I think that sort of, you know, shows the general point of, we often forget how energy really powers modern life. It warms us in the winter, it cools us in the summer, it transports us. I mean, I look around this room and I think pretty much everyone is from somewhere else. And this is what energy does. Energy allows us to live better than kings of the past. Energy really is prosperity. Yet, the climate fixation that we've been talking about means that both the World Bank and the IMF has pushed for rapid shift away from fossil fuels and towards renewables and for total ban on fossil fuel investment. And I think they need a reality check. There is no transition that is taking place globally. We use more renewables, yes, but we also use much more fossil fuels. Uh, the world still gets more than 80% of its total energy from fossil fuels. And the decline is so slow that on current trends, we will only get to 0% in four to ten centuries. Germany has spent famously 700 billion euros, uh, on its energy shift since 2002. Uh, electricity prices more than doubled, and yet Germany's energy is still 79% fossil fuels. China produces most of the world's solar panels, wind turbines, and electric cars, but much of this, of course, is produced with coal. China's energy is still 87% fossil fuel.
I would say a Chinese EV is a coal-powered vehicle, uh, a lot of it is in China, and of course, especially some places which are driven enormously on coal, for instance, India. Uh, they're simply, they emit more. Uh, but the, but the real point, I think, is that poor countries want to get rich like China did. They want to use more energy, and much of this will be fossil fuels. They don't want to copy Germany, and they don't have 700 billion euros to blow on climate policies. So forcing poor nations into renewables that even rich Germany or China aren't achieving is just simply hypocritical. In your IIF speech last year, you called on the World Bank to focus its efforts on expanding developing country access to reliable and affordable energy and you criticized its climate targets. You noted that the IMF devotes disproportionate time and resources on climate, even though it's not part of the fund's mission. So, what have you seen from the bank and the fund in these areas since your speech? And what more do you expect from them?
Again, as, as I said earlier, I, I think the World Bank is has made a good pivot. They, they are now pushing, or they are a proponent of nuclear energy. I'm not sure how that wasn't considered a renewable for for so many years. I mean, if, if you look now, France is powering the European energy grid, and their, their reactors are running full blast.
And they're also one of the cleanest.
And they're also one of the cleanest. But when you think, we were the, the Europeans got into this, uh, terrible recursive loop because they, they decided to, um, turn, turn off their nuclear energy. They became, the Germans became more dependent on, uh, Russian crude, and then the, the Russians were selling them the crude to finance the war against them. So, but, you know, I, I do think that that the world, the World Bank is moving to an all-of-the-above energy process and, uh, program, and again, is getting back to the core mission of lifting people out of poverty. And, you know, I, I would just say too, I, I always find it's very good to follow not only what people say but what they do. And Bill Gates, who for a for a long time had pushed this climate agenda, again, has also, uh, changed tact. And, you know, if you read his recent speeches, uh, he believes we're going to innovate our way out of this. And if you look, I think the Gates Foundation has something like $13 billion of investments in, uh, energy innovation. And look, no one's expecting a deus ex machina one day and everything will be fixed. But in, in the U.S., we were going to run out of, uh,
Everything.
Well, we're going to run out of everything, but we, we were going to run out of the crude and crude, uh, derivatives, and then fracking was invented, and now that the, the U.S. has the largest, the larger reserves than Saudi and Venezuela. Uh, you know, on, on the other side, uh, the, the IMF, I think, getting back to this message, the, of stability, of monitoring global imbalances, of stepping in early, and, um, you know, I, I never, I didn't always agree with Ben Bernanke's monetary policy, but what I always admired with Federal Reserve Chairman Bernanke was he had a framework, and you could almost see, he, if you asked him a question, he ran it through his framework, and everything was always consistent with Chair Bernanke. And I think with the IMF and the World Bank, the framework needs to always be consistent.
Yeah. I, I think, and on the Bill Gates point, I think really two things stand out. First of all, the innovation point that you just made. I mean, this is what has always solved the problem. Uh, Tim mentioned the, uh, uh, the Green Revolution that we had in the 1970s when we worried about running out of food. Remember, we didn't fix the problem of the world not having enough food by telling everyone, "I'm sorry. Do you mind not eating as much?" And then we'll send it down to whoever it is that we worry about. The point was that we innovated a way to generate much more food. And of course, we'll do the same thing with climate. We are going to solve big problems through innovation. That's how we've always done it. Um, but I think another point that Bill Gates made, which, which I think is incredibly powerful and useful when you talk about climate change, is he said, "We've for so long been talking about climate as if the point is to cut carbon emissions or to reach a certain temperature limit." No, the point is to make the world better for humans. And there, the question is, do we make the world better for humans by cutting carbon emissions by whatever tons, or do we make it better by, you know, for instance, making sure small children don't die, or that children get better educated in school? There are so many other ways that we can also do this. And this, of course, reflects back on the IMF and especially the World Bank on what can be done. And there are just so many incredible things that we can do. First.
Yeah. Again, you know, I think keeping the main thing the main thing and not getting distracted, uh, because the, it, it feels good, it's convenient, it, it's kind of part of the, the Davos consensus, which much of the Davos consensus seems to have been shattered.
Yes. So.
So I want to, uh, just take us to our third and, and, and last point, um, and talk about tradeoffs, um, because all international financial institutions need to get back to the core point of tradeoffs. Look, uh, the money that the World Bank spent on a solar panel can't be invested in healthcare or education. And the world's poor tell us very clearly not to focus on climate first. When Africans are asked in the Afrobarometer on what worries them the most, climate change came almost at the bottom. Uh, a vast survey of more than 50,000 Africans across 39 countries found that climate change ranked 31 of 34. Um, the top concerns are not surprising there. It's unemployment, the economy, health, education, poverty, roads, electricity, hunger, and corruption. And then it goes on for a long time until you get to 31, which is climate change. When your child is might die tonight from a preventable disease, no family cares about shaving a fraction of a degree off global temperatures in a century from now. Elected leaders of poor countries tell us the same thing. In a large survey of low and low-middle-income countries, they show climate ranks 12 of 16 issues. Even the World Bank's own client surveys show climate ranks low. So, international financial institutions should compact to focus on their strengths. As you've said, the World Bank should focus on poverty reduction, and the IMF on macroeconomic stability. But the world's poor are very clearly saying, "Don't focus on climate first." So, uh, from your perspective as Treasury Secretary, how do you view the international financial institutions and their effectiveness in general, uh, and the bank and the fund specifically?
Again, and, you know, I, I would also highlight that it's not a unique survey item among the world's poorest. Germany instituted very, very strict remodeling and, um, rebuild requirements for German households. So, you had to spend, I can't remember, it was 30, 40, 50,000 euros to upgrade the to a, a more green house, and they're all getting voted out. So, like, probation is not a good, um, is not a good motivator. Um, but again, I, I do think that we are determined. As, as I said last year, with the, with the multilateral institutions, the banks, uh, the, the U.S. wants to be in it to win it. We want to be good partners. America First does not mean America alone. And we, we want to, uh, go back to basics. And that these banks were invented around Bretton Woods, which was post-World War II. Europe was, or the, and Asia was a unique time in America, and it led to incredible prosperity, the, across the world. So, you know, why, why can't we do that again? And why can't we focus on growth? Like, what are the tools? What, what is hindering growth of these economies? You know, is it the unsustainable debt, which is, is the IMF? Is it the poor infrastructure, health, and hygiene, which is the World Bank? Because, you know, I, I think for a time, we kind of skipped the foundational elements and tried to jump to something else, kind of luxury beliefs. And in terms of, if a, if a government was not able to fund itself, or if people were not able to feed themselves, and I think we've just got to get back to that. I, I think Ajay and Cristina, uh, are, are have, have gotten the message and are moving forward, uh, in a very, very constructive way, and I want to congratulate them.
Yeah. No, that's great. And, and, and again, when you have to decide what to do, uh, obviously I'm, I'm an advocate for cost-benefit analysis, so I'm going to be sitting and saying they should be looking at it. But really, if you think about it, the World Bank and IMF used to be world leaders in cost-benefit analysis. And it makes sense. If you only have limited money, if you have to think about tradeoffs all the time, you have to ask yourself, "Where can we spend scarce resources and do the most good in the world?" And this is exactly what cost-benefit analysis does for you. It allows you to pick out the really, really good policies and make it just much more likely that we can actually achieve all these goals that we're talking about.
Well, yes. And I look, I, I think projecting anything that, if, if you look, economists have trouble projecting three, six, the, 12 months. Whether it's, uh, my economist at Treasury, whether it's the IMF or World Bank economists, and try, try to project something, you know, so far into the future. If you think about a Y-axis and an X-axis, what we're really thinking about is the Z-axis in terms of the trajectory. And why does the trajectory matter? Um, yes, the climate does change, as we all know that the natural, uh, habitat for the earth is actually water. You know, ice was probably, uh, I mean, it's a very long cycle, but ice was an unusual cycle. And we, we are going through cycles. And I, I believe that it is very difficult to deconstruct the, the, uh, reasons around why anything changes. But I think we better step back. What do we know? We know it's changing. And how do you increase resiliency?
Yeah. Exactly. And resilience really comes from more prosperity. And at the end of the day, of course, yes, climate change is a real problem. But if you're poor, if you have all these other problems that you struggle with, and you're vulnerable to disease and corruption and bad education and so on, these are the things that we can really help people with first. And so this is where, you know, both the world's poor is telling us we should focus, and this is where we can do the most good. And cost-benefit analysis very clearly says this is where we should be spending our money.
Look, I, I couldn't agree more. U.S. foreign policy got off course, you know, at a, at a point in, in Afghanistan that it, it became a social mission. And that the mission was, "Okay, we have to do this in the schools, and we have to have these goals." And now, like, Afghanistan's fallen back into ruin. And what we should have done was try to make a sustainable government rather than try to, from the top down, overlay our values on a completely different system. I think we could have, could have gotten a very different.
So I noticed that we've run out of time, but I wanted to stop you when you said, "I couldn't agree more."
Right.
So thank you. Well, thank you. And again, my, my message is, I, I think that the, both, both of the institutions, uh, are, uh, working on getting back to their core missions. I look forward to working with them, the, over the, the remainder of President Trump's term. I think that they have a valuable role, and I believe that, um, we can all work together. U.S. will have G20 this year, G7 next year, and the coordination between the U.S. leadership in both of those and IMF and World Bank, I think, can be very powerful.
Brilliant.
Thank you.
Thank you.