Economy

Developing countries get a bigger say in the World Bank

At the end of two days of the annual Spring Meetings of the International Monetary Fund and the World Bank, its constituents endorsed “voice reform” to increase the voting power of developing and transition countries (DTC) in the World Bank by 3.13 per cent, bringing their proportional voice to 47.19 per cent.

World Bank members including India also agreed to boost the “selective capital” of the institution by over $86 billion along with giving developing countries slightly over 47.19 per cent of the total votes. The advanced economies’ share under the new arrangements would drop to under 52.81 per cent.

However Ashok Chawla, Secretary, Department of Economic Affairs Leader of the Indian Delegation to the Development Committee Representing the Constituency consisting of Bangladesh, Bhutan, India and Sri Lanka, said, “What we have in front of us today is not a perfect set of arrangements. It is a compromise package.” Mr. Chawla argued that while a few of the outcomes that the DTC had hoped for had been met, the new structure still had flaws.

He argued that for the future, economic weight must be based on a blend that gives more weight to GDP at purchasing power parity, which captures the dynamism of economic growth and the real economy much better. Mr. Chawla said, “We can live with it today. But the future composition of the blend needs to be debated further.”

At the meetings, the first steps towards voice reform in the International Finance Corporation were also announced. The restructuring included an increase in basic votes and a selective capital increase of $200 million according to which DTC voting power would rise to 39.48 per cent and “move towards a broad and flexible alignment with IBRD [World Bank] shareholding.” Regarding the IFC restructuring Mr. Chawla said, “We support the increase in Basic Votes to 5.55 percent.”

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Printable version | Apr 2, 2020 10:25:51 PM | https://www.thehindu.com/business/Economy/Developing-countries-get-a-bigger-say-in-the-World-Bank/article16372737.ece

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