April 24, 2025
THE world has grown accustomed to receiving stern lectures from Washington on debt management, economic reforms and governance.
But perhaps the biggest irony - if not the best punchline in global finance - is this: the World Bank, a US creation that preaches austerity to developing nations, has maintained a deafening silence as the United States itself slides into economic chaos, courtesy of its own political leadership.
The disparity is striking. While the World Bank frequently advises Malaysia to implement fiscal austerity measures - such as tightening expenditure, reducing subsidies, and managing public debt - it has conspicuously refrained from offering similar counsel to the United States.
Neither during the presidency of Donald Trump nor under the administration of President Joe Biden has the institution demonstrated the resolve to address the fiscal challenges facing its founding nation.
This selective engagement raises serious questions about consistency and credibility. Let us now turn to the data - because unlike political rhetoric, the numbers present an unvarnished reality.
The United States currently carries a national debt exceeding US$36 trillion, with annual deficits projected to surpass US$2 trillion by the end of fiscal year 2025.
Its debt-to-GDP ratio is about 110 per cent, a level that would typically prompt concern from institutions like the World Bank if observed in a developing nation such as Malaysia.
However, due to its status as the issuer of the world's primary reserve currency, the US continues to borrow extensively, maintaining a position of fiscal privilege while advising others on responsible governance.
Then there's the matter of exports. Despite the scale and sophistication of its economy, manufacturing exports account for only around 7.0 per cent of US. GDP - a modest figure for a country that once prided itself on industrial strength.
In contrast, Malaysia continues to produce and export tangible goods - electronics, palm oil, rubber and machinery - firmly positioning itself within global supply chains.
The US, having long outsourced much of its manufacturing, now finds itself pointing fingers at the rest of the world when the economic consequences surface. It is, metaphorically speaking, akin to ordering lavishly, refusing to pay, and blaming the waiter for the bill.
The strength of the US dollar is sustained less by economic discipline and more by entrenched global dependence.
It remains the dominant currency for international trade, reserves and sovereign debt - not necessarily due to the United States' fiscal prudence, but rather because of longstanding systemic reliance.
Should this global demand diminish - through processes such as dedollarisation - the dollar could face significant instability, exposing the underlying weaknesses of America's fiscal position.
In contrast, the ringgit derives its value more directly from tangible economic fundamentals, including trade flows, commodity exports, and real productive activity, rather than from the legacy of its status as the world's default currency.
Which brings us to the question: Why doesn't the World Bank dare advise the US - the very country whose policies often defy economic theory, global consensus, and basic logic - but feels entirely at ease dictating terms to Malaysia and the rest of the Global South?
The answer, unfortunately, is not complex: the World Bank was born in the shadow of American power and has never really grown out of it.
It continues to shape developing nations in America's image, even as America increasingly becomes a parody of itself - spending more than it earns, exporting less than it should, and running on borrowed time and borrowed credibility.
The tables, however, are turning. Today, the US needs the World Bank more than the world needs the World Bank.
Its prescriptions on fiscal discipline, economic diversification, and debt control are far more applicable to the US than to many of the countries it tries to instruct.
With the rise of new partnerships, emerging lenders like the Asian Infrastructure Investment Bank, and increasing South-South cooperation, the World Bank's monopoly on advice is showing cracks.
As alternative financial institutions gain traction and countries increasingly seek independent pathways, the World Bank's influence gradually diminishing, raising the question of whether it can maintain its relevance in an evolving global landscape.
Countries that once took every word from Washington as gospel are now becoming more discerning.
Why should they listen to a tutor who flunks his own classes? If the World Bank wishes to reclaim its credibility, it must do more than preach to the powerless.
It must gather the moral courage to say to its creator, "You too must live within your means, export more than slogans and remember - hegemony is not an economic strategy.
Until then, perhaps the World Bank should issue its next austerity warning to its own backyard.