The veteran of Republican administrations in the United States was appointed to the role in 2019 when Donald Trump was president and previously served as Under Secretary of the Treasury for international affairs.
His tenure at the World Bank saw the organization grapple with global crises such as the Covid-19 pandemic, the Russian invasion of Ukraine and an international economic slowdown.
"After a good deal of thought, I've decided to pursue new challenges," the 66-year-old was quoted as saying in a statement from the bank, having informed its board of his decision.
"This is an opportunity for a smooth leadership transition as the Bank Group works to meet increasing global challenges," Malpass added.
In recent months, Malpass has come up against calls for his resignation or removal.
Climate activists had called for Malpass to be ousted for what they said was an inadequate approach to the climate crisis and the chorus grew louder after his appearance at a New York Times-organized conference last September.
Pressed on stage to respond to a claim by former US vice president Al Gore that he was a climate denier, Malpass declined several times to say if he believed man-made emissions were warming the planet -- responding, "I'm not a scientist."
He later said he had no plans to stand down and moved to clarify his position, acknowledging that climate-warming emissions were coming from man-made sources, including fossil fuels.
The White House previously rebuked Malpass, with Press Secretary Karine Jean-Pierre saying the expectation was for the bank to be a global leader on climate crisis response.
- Quick response -
The bank said in a statement on Wednesday that it has "responded quickly" in the face of recent global challenges, in particular mobilizing a record $440 billion to tackle climate change, the pandemic and other issues.
"Under (Malpass's) leadership, the Bank Group more than doubled its climate finance to developing countries, reaching a record $32 billion last year," the statement added.
In a note to staff seen by AFP, Malpass said: "Developing countries around the world are facing unprecedented crises and I'm proud that the Bank Group has continued to respond with speed, scale, innovation, and impact."
Malpass's term would have originally ended in 2024.
Environmental groups welcomed his departure.
"Under David Malpass, the @WorldBank lost valuable time in fighting climate change," tweeted Friends of the Earth.
"Not only did he fail to stop actions that fuel climate chaos and injustice, Malpass pushed for Wall Street-friendly policies that go against the public interest."
In a statement, Treasury Secretary Janet Yellen said the world has benefitted from his strong support for Ukraine, his work to assist the Afghan people and his commitment to helping low-income countries achieve debt sustainability through debt reduction.
She added that the United States looks forward to a swift nomination process by the World Bank's board for the organization's next president.
"We will put forward a candidate to lead the World Bank and build on the Bank's longstanding work... and who will carry forward the vital work we are undertaking to evolve the multilateral development banks," she said.
The head of the World Bank is traditionally an American, while the leader of the other major international lender in Washington, the International Monetary Fund, tends to be European.
Prior to assuming his role as World Bank president, Malpass repeatedly lambasted the big development lenders as wasteful and ineffective and called for reforms.
David Malpass: World Bank chief pressed by climate questions
Washington (AFP) Feb 15, 2023 -
In his four years as World Bank President, David Malpass oversaw its response to crises ranging from the Covid-19 pandemic to Russia's invasion of Ukraine, and food and energy shortages.
But the lead-up to the announcement Wednesday that he would leave the development lender nearly a year early -- by late June -- has been bugged by a climate denial row.
Malpass, 66, was a senior Treasury official when he was tapped to lead the World Bank in 2019 by then-President Donald Trump.
Prior to taking over the helm, he had lambasted big development lenders as wasteful and ineffective, calling for reforms.
Institutions such as the World Bank, he said in congressional testimony in 2017, "spend a lot of money" but are "not very efficient."
In 2007, the eve of the financial crisis, Malpass penned a Wall Street Journal op-ed telling readers not to "panic" because "housing and debt markets are not that big a part of the US economy."
In 2010, as the Federal Reserve was pumping cash into markets, he signed onto a letter to Fed Chairman Ben Bernanke calling for an end to the stimulus program, which he said would drive up inflation. It did not.
That year, he also made a foray into politics, waging an unsuccessful campaign to become the Republican senator from New York.
He was also an economic adviser to Trump's presidential campaign in 2016.
- Climate questions -
Climate activists have long called for Malpass to be removed from his position for what they called an inadequate approach to the climate crisis.
These voices have grown louder since his appearance at a conference last September, when he was asked to respond to a claim by former US vice president Al Gore that he was a climate change denier.
Malpass declined multiple times to say if he believed man-made emissions were warming the planet, responding that he was not a scientist and later drawing a rebuke from the White House.
"We expect the World Bank to be a global leader" on the climate crisis response, Press Secretary Karine Jean-Pierre told a White House briefing.
She added that the Treasury Department "has and will continue to make that expectation clear to the World Bank leadership."
Malpass had since sought to course-correct, acknowledging that emissions were coming from man-made sources.
His departure would give President Joe Biden's administration a window to choose a candidate who can oversee the push of the lender's reforms.
- Surprise -
Since taking leadership at the Washington-based lender, Malpass has overseen progress on its global crisis response package to support developing countries grappling with multiple shocks.
He also started work on the bank's evolution roadmap to help it more effectively address cross-border challenges like climate change and pandemics.
During his tenure, the World bank mobilized a record $440 billion responding to crises including the pandemic, climate problems and food shortages, and the group more than doubled its climate finance to developing countries.
"This is still a little bit of a surprise," said Clemence Landers, a former Treasury official who worked on US engagement with the World Bank and is now a policy fellow at the Center for Global Development.
She noted that the announcement is 14 months before he was officially scheduled to step down, but said that she thinks shareholders have been pushing for "a very ambitious reform agenda."
She believes there has been debate at the board of the World Bank, on whether it should officially add a third mission surrounding climate change and resilience, but it is unclear if such a push has been met with an energetic response.
"I think that the hope and expectation is that whoever replaces Mr Malpass at the head of the institution will be someone who's much more aligned with... the collective vision for the institution and where the shareholders want to take it," she said.
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