The above video includes a conversation between Bjorn Lomborg and Scott Bessent at the annual IIF gathering (Institute of International Finance). The introduction by IIF CEO Tim Adams starts about 11 minutes in. For those who prefer reading, below is a lightly edited transcript of comments back and forth, along with some added images. TA refers to Adams, BL to Lomborg and SB to Bessent.
TA: Today we’re going to deepen the discussion with a conversation between Bjorn Lomborg who runs the Copenhagen Consensus and the author 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. It really is how do we do 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 Bessent back today to join us at our spring meetings. So, ladies and gentlemen, please invite to the stage Bjorn and Secretary Scott Bessent.
BJ: Thank you very much. Tim, you kind of took away all our talking points. So, Mr. Secretary, it’s great to have a conversation here today about the World Bank and the IMF here at their spring meeting. The goals of these institutions, of course, is to accelerate global development, 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. In the latest year, 48% of the World Bank’s financing went to so-called climate finance, up from 44% the year before, exceeding their own uh 45% target. I suspect the reason why 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 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 IIF, 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 responded and what more do they need to do?
SB: Well, Bjorn, 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 to also say that the US leads the G20 this year and I can tell you that our agenda is growth. We believe in the US that the biggest risk to financial stability is a lack of growth.
When I look at the choices that Europe has made unable to follow the Draghy report from Mario Draghy 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, create more prosperity. And it turns out that it’s probably been a hint of the IMF and World Bank. I’m informed by Grace Hopper who was the first female Admiral in the US 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 the is global financial stability and stabilizing the countries that are in bad equilibriums and getting them back to a sustainable path an economically sustainable path. World Bank is to pull people out of poverty and we cannot have these kinds of elite beliefs get in the way. 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 GDP was going to be 60% % lower by the turn of the century. So then 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 do think we we are starting to see at at the World Bank. They are starting to take a tack more for energy abundance and all of the above. They have now gotten on board with nuclear energy. I’m not sure why it ever went away.
And then the IMF, I think, needs to lead by example, probably get rid of their golf course out in Maryland, which I said last year, and focus on global imbalances. Because I can tell you this slow motion buildup of global imbalances 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.
BL: 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 because 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, 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 the world’s poor are telling us that they want.
So I I had the fortune to work together with Nobel laurate Tom Shelling 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 of course that 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 need to get back to their core missions.
SB: 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 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 there’s a lot of undisclosed 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 do want to congratulate them. 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 are being brought out of poverty. The government of Javier Milei, I’m very interested to see it was the poorest elements of Argentine society who voted for him this time around and the young people. So there there’s optimism there. And then you know that the IMF is working on bringing Venezuela back into making it look more like a normal economy, and I think will play a very important role there. And I think the World Bank leadership is back on a good trajectory in terms of energy and unlocking resources for the the very poorest countries.
BL: Yeah. If you don’t mind, I’ll pick you up on that energy point because last October you withdrew the United States from the Green Climate Fund. Because in your words, their goals run contrary to the fact that affordable, reliable energy is fundamental to economic growth and poverty reduction. I think that shows the general point 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, 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 pushed for a rapid shift away from fossil fuels and towards renewables and for total ban fossil fuel investment. And I think they need a reality check. There is no transition that taking place globally. We use more renewables, yes, but we also use much more fossil fuels. 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 4 to 10 centuries.
Germany has spent famously 700 billion euros on its energy shift since 2002. 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 is produced with coal. China’s energy is still 87% fossil fuel. I would say a Chinese EV is a coal powered vehicle. Much of it is in China and of course especially in some places, for instance India, which are driven enormously on coal, they simply they emit more. But the real point 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 it is just simply hypocritical forcing poor nations into renewables that even rich Germany or China aren’t achieving.
In your IIF speech last year, you call 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?
SB: Again, as as I said earlier, 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 the full blast and it’s one of the cleanest. But when you think the Europeans got into this terrible recursive loop because they they decided to turn turn off their nuclear energy. The Germans became more dependent on Russian crude and then the Russians were selling them the crude to finance the war against them.
But you know I do think the World Bank is moving to an all of the above energy process and program and again is getting back to the core mission of lifting people out of poverty. And you know I would just say it’s very good to follow not only what people say but what they do. Bill Gates, who for a long time had pushed this climate agenda, has also changed tack. If you read his recent speeches he believes we’re going to innovate our way out of this. And the Gates Foundation has something like 13 billion of investment in energy innovation. Look no one’s expecting deos machina, one day and everything will be fixed. But in in the US we were going to run out of everything, going to run out of the crude and crude derivatives. And then fracking was invented and now that the the US larger reserves than Saudi and Venezuela.
On the other side, I think the IMF getting back to this message of stability, of monitoring global imbalances and stepping in early. You know I didn’t always agree with Ben Bernanke’s monetary policy, but I always admired Federal Reserve Chairman Bernanke because he had a framework. And if you ask him a question, you could almost see him run it through his framework and everything was always consistent. And I think with the IMF and the World Bank the framework needs to always be consistent.
BL: 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. Tim mentioned 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. But I think Bill Gates made another point which is incredibly powerful and useful when you talk about climate change. He said: “For so long we’ve 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 for instance making it so small children don’t die or that in school there’s so many other ways we can also do this or that. This of course refers 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.
SB: Yeah, again, you know, I think keeping focus on the main thing and not getting distracted by what feels good, it’s convenient, it’s part of the the Davos consensus while much of the Davos consensus seems to have been shattered.
WEF’s Global Risks Perception Survey
BL: Yes. So I want to just take us to our third and and and last point and talk about tradeoffs. Because all international financial institutions need to get back to the core point of tradeoffs. Look,the money that the World Bank spent on a solar panels 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 what worries them the most, climate change came almost at the bottom. A vast survey of more than 50,000 Africans across 39 countries found that climate change ranked 31 of 34. 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 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 from your perspective as treasury secretary, how do you view the international financial institutions and their effectiveness in general and the bank and the fund specifically?
SB: You know I would also highlight that it’s not a unique survey item among the world’s poorest. Germany instituted very very strict remodeling and rebuild requirements for German households. So you had to spend I can’t remember it was 30 40 50,000 euros to upgrade to a a more green house and they’re all getting voted out. So like probation is not a good motivator. I do think,as I said last year, that we are determined with the multilateral financial institutions the US 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 go back to basics.
These banks were invented around Breton Woods which was post World War II Europe and Asia, and was a unique time in America and it led to incredible prosperity the across the world. So, you know, why can’t we do that again? And why can’t we focus on growth? Like what are the tools? What what what is hindering growth of these economies? Is it the unsustainable debt which is is the IMF concern?
Is it the poor infrastructure, health and hygiene, which is the World Bank role?
Because you know for a time we kind of skipped the foundational elements and tried to jump to something else, kind of luxury beliefs, instead of issues when a government was not able to fund itself or if people were not able to feed themselves. We’ve just got to get back to that. I I think Ajay and Kristalina have have gotten the message and are moving forward in a very very constructive way and I want to congratulate them.
BL: When you have to decide what to do obviously I’m I’m an advocate for cost benefit analysis so I’m going to be saying they should be looking at it. 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 trade-offs 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 good policies and make it just much more likely that we can actually achieve all these goals that we’re talking about.
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