Thaindian News

Washington, April 26 (DPA) Governments Sunday approved nearly $90 billion in extra money for the World Bank and shifted the balance of voting shares in the institution slightly toward developing countries.
Developing countries were granted a 3-percentage-point shift that gives them just over 47 percent of the total votes, while advanced economies’ share of the total falls to just under 53 percent.

The bulk of the vote increases went to emerging powers, while the world’s poorest nations’ share remained level. Developing countries have long sought equal say with industrial powers, but that will have to wait until at least 2015 when the next review is due.

The reforms reflected new realities in the world economy and were “crucial for the bank’s legitimacy,” said World Bank President Robert Zoellick, adding that he hoped “developing countries will achieve parity over time”.

China was the biggest benefactor, its vote share rising from 2.77 percent to 4.42 percent, making the Asian powerhouse the third most influential member of the World Bank behind the US and Japan. Germany, Europe’s largest economy, fell to fourth place.

China’s massive increase was a “one-time compromise” that was “frowned upon” by a number of donor countries, said Gudrun Kopp of Germany’s Development Ministry. She called for a more “reliable and transparent” system and a greater focus on Africa by the 2015 review.

The Development Committee, the steering arm of the World Bank, agreed to scale up the institution’s lending resources by just over $86 billion, replenishing coffers that were sharply depleted by the global financial crisis of the last two years. Of those new funds, $5.1 billion would come in paid-in capital.

Zoellick called the increase a “strong vote of confidence” by the world’s development and finance ministers, who met in Washington to seal the deal. The extra money meant the bank no longer faced the prospect of cutting back lending this year, he said.

The capital increase comes after the World Bank’s sister lender, the International Monetary Fund, saw its own lending resources tripled by world leaders last year to $750 billion.

US Treasury Secretary Timothy Geithner said the World Bank had made “a strong and compelling case” for the money after lending more than $100 billion to poor countries since the financial crisis began picking up steam in July 2008.

Geithner welcomed the voting reforms as a “major step” that “will better reflect the weight” of developing countries in the global economy. The US vote share stayed level at 15.85 per cent, as it was mostly European countries and Japan that ceded influence.

Developing countries viewed both the funding and voting gains as a first step and said they would continue seeking more of both. Aid agencies also pushed for a greater voice for the poorest countries.

“It looks like we’ll have a more representative World Bank, with countries like China being given a bigger say, but poor countries are still effectively shut out” of the decision-making, Oxfam spokeswoman Elizabeth Stuart said.

Brazilian Finance Minister Guido Mantega said the extra money was inadequate “to address the huge development challenges the institution has ahead” and said he was disappointed that governments hadn’t been more ambitious in reforming the institution’s voting.

Ministers had agreed at their last meeting in October to shift voting powers by at least 3 percent toward developing countries. Mantega complained that “the 3-percent floor practically became a ceiling during our negotiations.”