Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Ireland’s finance minister Paschal Donohoe is stepping down to take up a senior position at the World Bank, creating an early vacancy at the helm of the Eurogroup, of which he has been president since 2020.
Donohoe was re-elected for a third term as Eurogroup president in July, a role that was very high-profile during the Eurozone sovereign debt crisis, handling the EU’s response, but has since involved co-ordinating fiscal policy in the single currency bloc.
Donohoe’s premature departure will kick off a race among Eurozone capitals to replace him. His third term as Eurogroup president had been due to end in 2027.
The Cypriot finance minister, Makis Keravnos, will serve as acting Eurogroup president until an election can be held, a spokesperson for the body said.
The president of the Eurogroup must have the support of a majority of Eurozone finance ministers. In the most recent election, candidates from Spain and Croatia withdrew their bids when it became apparent that Donohoe would win a third term.
Among Donohoe’s achievements as Eurogroup president was coordinating the bloc’s fiscal response to the economic downturn induced by the Covid-19 pandemic and advancing difficult negotiations on areas such as the banking union.
But on the eve of his re-election this summer, Germany, France, Italy, Spain and the Netherlands levelled some criticism, writing in a joint letter “that the mandate of the next Eurogroup President will start at a critical juncture, from both a macroeconomic and geopolitical standpoint” and that the body “must rise to these new challenges”.
Donohoe said in a statement on Tuesday that it had been “a privilege to serve as president and member of the Eurogroup; I did my best every single day. I want to do the same in the work of the globally vital institution that I will now join, at a time of great change in our world.”
He will become managing director and chief knowledge officer at the World Bank, based in Washington.
Ireland was expected to appoint a new finance minister from Donohoe’s conservative Fine Gael party later on Tuesday, a government spokesman said.
Donohoe had worked on Ireland’s last 10 budgets as either finance or public expenditure minister and had long been expected to seek an international role after previously courting the job of managing director of the IMF.
Additional reporting by Sam Fleming in London
