Calls for change at World Bank
ISTANBUL — The World Bank needs to become more efficient in how it uses its resources and give more say to developing economies, several member states, including major donors the U.S. and Britain, said Monday.
U.S. Treasury Secretary Timothy Geithner said donors were themselves facing fiscal hardship at home and wanted guarantees that money would be used effectively by institutions such as the Washington-based bank, which assists developing countries.
“To this end, we will be seeking critical institutional reforms in any consideration of additional resources,” Geithner said in a statement at a meeting of the World Bank’s development committee, which sets policy.
The bank and its sister institution, the International Monetary Fund, are holding their annual meetings this year in Istanbul, Turkey, where the discussion has focused on internal reforms as well as the fragile recovery from the global financial meltdown.
Douglas Alexander, Britain’s secretary of state for international development, and Alistair Darling, chancellor of the exchequer, said the World Bank should be more transparent and make clear how it would use resources.
“We believe that the Bank still has ample headroom and can continue to do more with its existing resources,” they said in a statement.
“The Bank needs a more equitable shareholding structure, which gives developing country members a stronger voice. This should be based on a credible, robust and dynamic formula,” they said.
Robert Zoellick, the World Bank’s president, acknowledged that reform was vital to securing resources from member nations even as fiscal constraints loom next year.
“To be able to build support with legislative bodies, we also have to stress a reform agenda,” Zoellick said. “We’re into the world of politics here.”
The bank’s development committee said in a statement that it was committed to reaching an agreement on voting reform by meetings planned for the spring of 2010.
“It will be important to protect the voting power of the smallest poor countries,” the statement said.
Ministers from Russia, India, Indonesia, Brazil and Venezuela said the credibility of the bank, which assists developing countries, would erode unless countries have a voice consistent with their weight in the global economy.
The appeals follow a decision at a Pittsburgh meeting of the Group of 20 forum rich and developing countries that the G-20 would become the world’s main economic decision-making forum, instead of the G-7 group of rich countries.
At that meeting, Group of 20 leaders agreed to redistribute at least 3 percent of voting power in the World Bank, and 5 percent in the IMF. The G-20 includes developing economic powerhouses such as China, India and Brazil.
“We must be aware that the World Bank’s credibility and legitimacy could suffer without tangible and timely progress on the voice and participation reform in which we are currently engaged,” said Jorge Giordani, Venezuela’s minister of planning and development.
Aleksei Kudrin, Russia’s finance minister, said Russia should have more say because its share in the world economy exceeds 3 percent, which is greater than its current voting power in the International Bank for Reconstruction and Development, a part of the World Bank.
The Washington-based World Bank loans money and makes grants to developing and poor countries to pay for investment in education, health care, infrastructure, agriculture and natural resource management.
In the spring, shareholders asked the bank to provide $100 billion in support over the next three years, but demand is growing and the bank says it will face serious constraints in the middle of next year.
The IMF fosters global monetary cooperation to facilitate international trade, and has bailed out a number of cash-strapped governments that ran into trouble during the ongoing world financial crisis.
Zoellick has called for an increase in the share of developing countries in the institution to 50 percent over time. The 3 percent increase proposed by the G-20 would create a 47 percent share for those countries, he said.
Pranab Mukherjee, finance minister of India, said a 6 percent shift in voting power was ideal.
“That would be truly transformational,” he said. “The shift can happen at one go or in stages.”
Guido Mantega, Brazil’s finance minister, also applauded a 6 percent shift, but said the process should not be linked to changes in quotas at the IMF.
“They reflect largely the initial allocations and historical evolution, which the IMF is in the process of reviewing,” he said.
Associated Press writer Suzan Fraser contributed to this report.
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