What if US leaves IMF and the World Bank?

After withdrawing the US from the Paris climate agreement and the World Health Organisation, President Donald Trump may pull the country out of more international institutions in the coming months. Notably, Project 2025 – the blueprint for his second presidency, developed by the conservative Heritage Foundation – calls for the US to exit the International Monetary Fund and the World Bank. Rather than acceding to Trump’s demands, member countries should recognise that a US withdrawal would primarily harm the US and leverage that to negotiate on their own terms. On February 4, Trump ordered a sweeping 180-day review of all international organisations to which the US belongs and supports, as well as "all conventions and treaties to which the US is a party.” The directive aligns with the goals of Project 2025, which dismisses the IMF and World Bank as "expensive middlemen” that "intercept” US funding before they reach projects abroad. If Trump follows this playbook, a US exit would be imminent.But Project 2025’s authors have clearly misunderstood how these institutions are funded and run. By abandoning the IMF and the World Bank, the US would lose a key source of global influence and economic leverage. In effect, the US would forfeit vital tools for supporting its partners – and withholding financing from its foes.The proximity of the IMF and World Bank headquarters to the US State Department, Treasury, and Congress is no coincidence. The US has consistently maintained tight control over these institutions, shaping their policies and leadership to advance its national interests. The US has always appointed the World Bank’s president, approved Europe’s choice to lead the IMF, and selected the Fund’s deputy managing director. It remains the only member country with the power to block major decisions unilaterally, as both the IMF and World Bank require an 85% majority.Unsurprisingly, studies have repeatedly shown that the IMF and World Bank’s lending patterns closely align with US national interests. The US regularly leverages the IMF as a "first responder” to protect the US economy. Trump knows this. In his first term, it enabled him to provide his "longtime” friend, the then-President of Argentina Mauricio Macri, with a $57bn IMF programme – the largest of its kind in the Fund’s history (paid for by all the members of the IMF). Similarly, the US has used the World Bank to bolster security and economic alliances, address terrorism threats, and support the postwar reconstruction of countries like Iraq and Afghanistan following US-led invasions.Perhaps most importantly, the actual cost of US participation in the IMF and World Bank is far lower than many assume. Every year, the Treasury Department evaluates the financial impact of the country’s contributions to the IMF. In the 2023 fiscal year, it reported an unrealised gain of $407mn.The World Bank offers similar opportunities to leverage US resources. The main arm of the World Bank Group, which has four other subsidiaries, is the International Bank for Reconstruction and Development. The cost of running the IBRD is not paid by the US but by major borrower countries such as India, Turkiye, Indonesia, Argentina, and the Philippines. Their loan repayments, along with the IBRD’s net income from previous years, largely fund the organisation’s headquarters, staff salaries, and other operational expenses (most of which flow directly into the economy of Washington, DC).Unlike many multilateral institutions, the IBRD does not rely on direct country donations. Instead, it raises capital by issuing bonds and then lends the proceeds to developing and emerging economies. In effect, the IBRD finances itself – issuing $52.4bn in bonds in 2024. Although its bonds are backed by guarantees from member countries, the IBRD has never tapped its callable capital. Consequently, each shareholder provides a small portion of its committed share as "paid-in capital.” For the US, that amounts to $3.7bn – about 19% of the $20bn in subsidies the federal government has given Elon Musk’s SpaceX over the past 15 years.To be sure, the US contributes to the World Bank in other ways. In 2018, for example, Trump’s first administration approved a $7.5bn capital increase for the IBRD. This does not demand more financial contributions from the US. But the US gets much in return. For example, its contributions to the World Bank’s concessional lending arm, the International Development Association, are voluntary and renegotiated every three years, giving the US enormous influence over IDA lending.Simply put, withdrawing from the IMF and the World Bank would be a grave mistake, stripping the US of its ability to shape the rules of the international monetary order and pursue its strategic interests. Yet at least some in the Trump administration appear tempted.Even if the US does not withdraw from the World Bank and instead withholds its funding, member countries representing 70% of the total voting power could suspend its voting rights for failing to meet its financial obligations. The US would then lose all rights under the Bank’s Articles of Agreement – except the right to withdraw – while still being bound by its existing commitments. If the suspension lasts more than a year, the US will automatically lose its membership unless the same majority votes to reinstate it.US President Theodore Roosevelt famously said that foreign policy should "speak softly and carry a big stick.” The Trump administration believes in speaking loudly and letting Musk use its big stick to smash things. Other countries may be shocked, but they are not helpless. By staying focused, working together, and acting decisively, they can still salvage the multilateral system. – Project Syndicate• Ngaire Woods is Dean of the Blavatnik School of Government at the University of Oxford.