UN official urges more power to developing countries in world financial system

10:56, April 25, 2010      

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Developing countries should have more voice and participation in the global financial framework, said a senior United Nations official on Saturday.

Continued reform is needed to better enable the international financial institutions to respond to current challenges and to better prevent similar crises in the future, said Sha Zukang, UN under-secretary-general for Economic and Social Affairs, in a statement to the International Monetary Fund and Financial Committee (IMFC) meeting.

In 2009, both the IMFC and the Development Committee agreed to shift at least 5 percent of aggregate quota shares in the IMF and 3 percent in the World Bank from developed to developing and transition countries.

However, many developing countries had maintained that the shift should be of at least 7 percent and 6 percent respectively, Sha said.

Sha said that a proposal had been put forward to lower the voting threshold from critical decisions from 85 percent to between 70 and 75 percent, in a bid to democratize the voting procedure and ensure that decisions affecting key aspects of IMF governance have the support of the majority of its members.

Consideration should also be given to significantly increasing the weight of the basic votes of all member countries and double majority voting to a wider range of decisions, he added.

The World Bank President Robert Zoellick urged earlier this week that shareholders of the bank should keep their promise to give developing countries "a bigger say" in the international financial organization. During the spring meetings, 186 shareholders of the World Bank will vote on the decision.

In his statement, Sha also urged reform of the global reserve system. The most feasible reform in this regard may be to broaden existing Special Drawing Rights (SDR) arrangements which, over time, could gradually evolve into a new and widely accepted international reserve currency, he said. In addition to their potential role as the eventual center of a new reserve currency arrangement, SDR could also become a source for development finance, Sha said.

The world economy started 2010 with clear signs of continued recovery, but the recovery remains fragile and uneven across countries, Sha said.

To address the challenges, Sha suggested that countries should strengthen recovery through counter-cyclical policies and development financing, through macroeconomic policy coordination, cooperation for more effective international financial regulation and international cooperation in tax matters.

The IMFC meeting is part of the two-day International Monetary Fund-World Bank Spring Meetings which kicked off on Saturday. Issues including challenges facing the world economic recovery and global financial system reform will be discussed at the meetings.

Source: Xinhua


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