Department for International Development
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We need a World Bank in practice as well as name
We need a World Bank in practice as well as in name, Douglas Alexander said today in Istanbul, ahead of the Bank’s annual meetings. He added that now is the opportunity for the most fundamental reform of Bank representation since it was created in 1944.
The International Development Secretary confirmed the UK will push for at least a 3% shift in voting power in favour of developing countries by April 2010. He made clear these countries must have more say in the Bank.
He said other fundamental changes are needed. For instance, latest figures indicate that in the Bank’s last financial year (to 30 June 2009), its disbursements to low-income countries in sub-Saharan African fell 10% on the previous year. This is symptomatic of the need for a speedier, more streamlined organisation.
The Bank has shown that it can be nimble and responsive in its crisis response, for example during the food crisis, but these new ways of working must be reflected across the whole operation particularly given the impact of the ongoing economic crisis.
These reforms form part of a package which the UK wants to see agreed in April next year, in line with the timetable agreed at the Bank’s Spring Meetings this year. The UK wants this package to comprise:
* A stronger voice for developing countries via a more equitable shareholding formula which should generate at least a 3% swing to poorer countries
* Better corporate management at the World Bank – this means a clearer division of labour between shareholders, management, and the Board of Executive Directors; a more strategic role for the Board; and better performance review systems for the President and senior management
* Agreement on whether to provide extra funding for the parts of the Bank that lend to middle-income countries, the International Bank for Reconstruction and Development (IBRD), and provide support to the private sector, the International Finance Corporation (IFC).
Douglas Alexander said:
"We need a World Bank in practice as well as in name. Developing countries need more say. The agreements reached in Pittsburgh last week signalled the potential for the most fundamental reform of representation within the Bank since 1944."
He called for Bank shareholders and management to spread and deepen commitment to create a more responsive, client-driven organisation, saying client partners too often had concerns about heavy and inflexible procedures, a lack of decentralised decision making, and slow transfer of money to low-income countries.
Douglas Alexander will say that the world needs a stronger Bank which is more effective and legitimate – so developing countries have more confidence in it, in bad times and good, and donors are more willing to finance its activities.
He will say that although the Bank has responded well to the
current economic crisis, it should have a permanent crisis
response facility which provide additional financing more rapidly
when economic shocks hit the poorest countries. He will press for
this to be agreed before the end of this year and operational in
early 2010.
Background
The Prime Minister over the summer consulted the poorest countries about the reforms to the World Bank in his Chair’s Review. It is clear that developing countries also feel strongly about the need to modernise the Bank.
Contacts:
Department for International Development
Phone: 020 7023 0504
nds.dfid@coi.gsi.gov.uk
Stacey Vickers.
Phone: 020 70230513
s-vickers@dfid.gov.uk
