Seldom has Germany received such praise at a meeting of the International Monetary Fund (IMF) and the World Bank than it did in late April. The debt-financed package for defence and infrastructure by the new coalition government is viewed in a positive light by the international community. The IMF’s experts feel vindicated. Seen through their macroeconomic lens, Germany has long had unused potential for additional borrowing – and is now finally taking the lead. Other countries hope to benefit from an economic boost if Europe's largest economy returns to a growth trajectory. According to the IMF, however, the impact of the German debt package won’t be felt before 2026.

But the hopes pinned on Germany go further. The G7 heavyweight from the old continent is now expected to take on a political leadership role. Given the erratic behaviour of the US administration, the longing for security and reliability has grown. US President Donald Trump not only abruptly pulled out of international development projects, but the tariff war he sparked has also unsettled business leaders and financial markets. At the Spring Meeting in Washington, participants welcomed US Treasury Secretary Scott Bessent’s reaffirmation of US commitment to the IMF and World Bank with relief. Worse had been feared: a US withdrawal as a key member and shareholder.

But Bessent’s statement was not as solid as it may have appeared. The US commitment to the two international financial institutions – both headquartered in Washington – is conditional. The Trump administration’s aim to reshape the international economic system is evident here as well. The IMF, it argues, should stick to its macroeconomic core tasks. Instead of focusing on monetary cooperation and financial stability, the Fund is – according to the US – increasingly preoccupied with issues that are anathema to the administration: climate change, gender equality, and social matters. This criticism applies even more strongly to the World Bank, which, while traditionally focused on helping the world’s poorest countries, added a strategic goal last year: to promote a „livable planet“. A substantial portion of the World Bank Group’s funding now goes toward renewable energy.

The formal commitment to the World Bank is also undermined by concrete actions, such as the withdrawal of US funding pledges to the International Development Association (IDA), the World Bank Group’s concessional financing arm. These commitments were made by the previous Biden administration. Staff at both the IMF and World Bank are increasingly unsettled, as the US government is pressuring not just leadership but also employees to align with its policy direction. Some are now concerned they may be turned away at the border when returning to Washington from overseas. Under the Trump administration, anything seems possible.

Any significant weakening of the IMF and World Bank strikes at institutions that are meant to provide stability in a world whose rulebook is being disrupted – primarily by the United States. Europe's economic influence won't be sufficient to replace the US, and Germany's influence even less so. Still, there are subtle signs of hope, like more prominent speaking slots for German representatives at financial institution panels – indicating a desire for a reliable voice in a disordered world. Germany’s new government has an opportunity to exert a stabilising influence on the global stage. But it also bears the responsibility of laying the groundwork for this role through sound policy. That includes using its new borrowing capacity carefully and in ways that foster growth. If the coalition fails, it will lead to a loss of hope, both domestically and beyond.