Long associated with the top job at the International Monetary Fund (IMF), Minister for Finance Paschal Donohoe has surprised commentators on Tuesday by taking up a senior role with the other major global financial institution, the World Bank.
Mr Donohoe notified Cabinet on Tuesday that he planned to step down as finance minister and as a TD for Dublin Central, effective immediately, to take up the position of senior managing director at the World Bank.
He is due to start in his new role next Monday. He will also serve as the bank’s chief knowledge officer.
The managing director role is effectively the bank’s number two position under the president, who is currently Ajay Banga.
Mr Donohoe will take over from Dutch-Austrian national, Axel van Trotsenburg, who is retiring from the role after a 37-year stint at the Washington-based bank.
As he will no longer be Ireland’s finance minister, Mr Donohoe will also have to resign from his position as president of the Eurogroup which he has held since 2020.
He is said to have informed senior department officials of his intentions yesterday afternoon in advance of a World Bank board meeting in Washington last night to agree his appointment.
Unlike the World Bank president, who is appointed for a five-year term, the managing director role does not typically have a fixed term. According to the bank’s annual report from 2023, Mr Donohoe’s predecessor received a tax-free salary of $475,230 plus living expenses of $156,529.
In contrast to the IMF (which focuses on short-term financial stability), the World Bank focuses on long-term economic development and poverty reduction. In his new role, Mr Donohoe will oversee the core development work of the bank which provides financial aid and technical advice to low-income countries.
According to recent data, India tops the list of countries borrowing from the World Bank, holding $39.3 billion in outstanding loans.
Mr Donohoe will also be responsible for managing partnerships with other international agencies, such as the UN and the IMF, and will represent the bank at G7 and G20 meetings. He will lead the bank’s engagement at the annual COP climate meetings.
“Paschal brings more than 20 years of public service, and knows first-hand how good policies can unleash private capital mobilisation, boost growth and generate jobs,” Mr Banga said.
“He also brings extensive knowledge of how investors, private sector, financial companies, technology firms and others operate – from his near decade of experience in the private sector. This combination will be invaluable at ensuring the World Bank Group delivers more impact at scale,” he said.
Each of the World Bank’s 189 member countries has a governor and an alternative governor – typically, including in Ireland’s case, the member state’s finance minister and its central bank governor.
The World Bank’s decisions are made by the president in conjunction with his board of 25 executive directors. Voting power is dominated by the United States (15.85 per cent), followed by Japan (6.84 per cent), China (4.42 per cent), Germany (4 per cent) and both France and the United Kingdom, each with 3.75 per cent.
