Fitch Warns of Possible Loss of World Bank's AAA Rating

Fitch has become the second credit rating agency to indicate that the valuable AAA rating of the World Bank and other major multilateral banks could be at risk if Donald Trump decides to withdraw support from the United States.

The U.S. president recently signed an executive order that establishes a six-month review of government backing for all international organizations, with the goal of determining whether it's appropriate to withdraw from them or propose reforms. "Any indication that the exit from a MDB (multilateral development bank) becomes a tangible possibility could lead to a negative rating adjustment," Fitch explained, a day after Moody's made a similar statement. Fitch emphasized that while it considers a U.S. exit "unlikely," if it were to happen, the impact would be significant, causing economic turmoil, and could even "set a precedent and affect the unity of other shareholders." Additionally, Fitch noted that the immediate response would likely be to downgrade the ratings of the affected MDBs or place them on negative watch, according to the language used by rating agencies. The loss of the AAA rating "will depend on how the withdrawal occurs and the reaction of other shareholders," Fitch clarified.

It is crucial to stay alert to these developments, as a loss of the World Bank's AAA rating would not only impact the finances of the organization but could also destabilize confidence in international markets and generate a negative perception of the solidity of multilateral lending. For investors, this signals the need to diversify and not rely solely on institutions that, while large, may be subject to political decisions that could directly affect them.