Ireland’s Donohoe resigns as finance minister and Eurogroup chief to join World Bank

Audio By Carbonatix

Enlarge

By Padraic Halpin and Graham Fahy

DUBLIN (Reuters) -Paschal Donohoe resigned as Irish finance minister and Eurogroup president on Tuesday to take up a senior World Bank role, a surprise decision that led his party leader Simon Harris to move to the finance brief from foreign affairs.

The World Bank said in a statement that Donohoe would start on November 24 as managing director and chief knowledge officer, a role aimed at ensuring that the lender replicates and scales up successful development solutions for greater impact.

Donohoe will lead the World Bank’s engagements with governments and philanthropies and his new role modifies a top position vacated by Axel van Trotsenburg, who retires at the end of November as senior managing director.

Donohoe’s exit from Irish politics leaves the coalition government without one of its most experienced members. He has held one of the two main budget ministries for almost a decade and first became finance chief in 2017, helping guide Ireland’s public finances to become one of the healthiest in Europe. 

DONOHOE WAS RE-APPOINTED IN JANUARY

He was only re-appointed to the role in January following an election and was also reelected as chair of the group of euro zone finance ministers for a third time in July, a term that was due to last two-and-a-half years.

“My aim has been to build a better and fairer Ireland through careful management of our economy and public finances,” said Donohoe, who will move to the World Bank as one of its managing directors and chief knowledge officer later this month.

“I want to now do the same in the work of the globally vital institution that I will join, at a time of great change in our world,” he told reporters.

World Bank President Ajay Banga said in a statement that with more than 20 years of public service, Donohoe knows how good government policies can mobilize private capital, generate jobs and boost growth.

“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,” Banga said. “This combination will be invaluable at ensuring the World Bank Group delivers more impact at scale.”

Banga started his World Bank tenure in 2023 with steps to dramatically expand lending capacity to finance climate change initiatives. But he has put more emphasis on scaling up job creation efforts since President Donald Trump took office, embracing nuclear power in line with a “back to basics” directive from Treasury Secretary Scott Bessent to pull back from climate finance.

ESCHEWED CALLS FOR BIGGER TAX CUTS

Donohoe is the latest senior member of the governing Fine Gael party to leave politics, following then-Prime Minister Leo Varadkar’s shock resignation last year and former Foreign Affairs Minister Simon Coveney’s departure shortly afterwards.

With only one of the party’s other senior ministers in that role for more than two years, Deputy Prime Minister Harris nominated himself for the finance role. Under the terms of the coalition deal with fellow centre-right partners Fianna Fail, Fine Gael is due to hold the finance brief until late 2027.

Harris was prime minister from April 2024 to January 2025 and is due to take over as premier again in late 2027. Helen McEntee, a former European Affairs minister, moved on Tuesday to foreign affairs from education. 

Dubbed “Prudent Paschal” by some local media, Donohoe, 51, has often eschewed demands for spending large budget surpluses on even bigger tax cuts and increases in public spending.

He and Public Expenditure Minister Jack Chambers are due to publish a new medium-term economic plan shortly, having pledged to further moderate spending increases amid warnings that the corporate tax boom funding them could end suddenly.

(Reporting by Padraic Halpin and Graham Fahy, additional reporting by David Lawder in Washington and Sam Tabahriti in London; editing by Ros Russell, Conor Humphries and Rod Nickel)