World Bank, IMF end Spring Meetings with solid step in voice reform

08:29, April 26, 2010      

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Members of the Development Committee take part in the group photo during the IMF/World Bank Spring Meetings in Washington, capital of United States, April 25, 2010. (Xinhua/Zhang Jun)

The World Bank and the International Monetary Fund (IMF) ended their Spring Meetings in Washington on Sunday, with a solid step in the long-expected voice reform, a cautious note on exit strategy and a call for global cooperation amid uncertain recovery prospects.

STRIDES IN VOICE REFORM

The meetings approved a plan to increase the developing countries' voting power in the International Bank for Reconstruction and Development (IBRD) by 3.13 percentage points to 47.19 percent, representing a total shift of 4.59 percent to developing and transition countries since 2008.

The move marks "important strides of increasing the voice and influence of developing countries at the World Bank Group," World Bank President Robert Zoellick said at a press conference.

"The endorsement of the shift in voting power is crucial for the bank's legitimacy," he added.

As a result of the shift, China's voting power has now increased to 4.42 percent from 2.77 percent, the third biggest after the United States and Japan.

Brazil's voting power has risen from 2.06 percent to 2.24 percent, and India from 2.77 to 2.91.

The meetings also approved a capital increase of 86.2 billion U. S. dollars for the IBRD, including 58.4 billion dollars in general capital increase and 27.8 billion dollars in selective capital increase.

By increasing its legitimacy through the voice reform and rebuilding its capacity through the capital increase, the World Bank will strengthen its efficiency, effectiveness and accountability to help the world battle the current crisis and meet future challenges, a communique issued at the end of the meetings said.

COUNTRY-SPECIFIC EXITS

The meetings concluded that the global recovery has been encouraging and better than expected, but cautioned that recovery has been uneven. It called for country-specific exits from stimulus measures.

IMF Managing Director Dominique Strauss-Kahn told a press conference on Saturday that the recovery has been faster in Asia and more sluggish in other parts of the world.

"We will continue to work to phase in country-specific exits from stimulus, recognizing the diverse pace of recovery and potential spillovers across countries and regions," the IMF's policy-steering body, the International Monetary and Finance Committee (IMFC), said in a communique issued after its meeting.

The communique echoed a Friday statement of the G20 finance ministers and central bank governors, who said stimulus measures should be maintained in economies where growth is still highly dependent on policy support until the recovery is firmly driven by the private sector and becomes more entrenched.

STRENGTHENING FINANCIAL SECTOR

Noting that problems in the financial sector were at the heart of the recent crisis, the IMFC said: "Strengthening financial regulation, supervision, and resilience remains a critical but as yet incomplete task."

"We agree to redouble efforts to forge a collaborative and consistent approach for a stable global financial system that can support the economic recovery," said the IMFC.

It said it is looking forward to the completion of reviews under the Financial Sector Assessment Program of countries with systemically important financial systems, and supports continued efforts to map systemic risks and transmission channels.

On the controversial bank tax, the IMFC said the IMF is working on "a range of options on how the financial sector can make a fair and substantial contribution to cover the burden" of strengthened regulation.

SUPPORT TO LOW-INCOME COUNTRIES

The participants of the meetings welcomed the recovery in many low-income countries, attributing it to their improved microeconomic frameworks, effective policy responses and the support of the international community.

The meetings, however, noted that the crisis has interrupted progress in attaining the Millennium Development Goals, and called for greater support to poor countries, as the 2015 deadline is approaching.

The delegates welcomed the IMF's recent adoption of a framework for mobilization of loan resources for concessional lending to low- income countries, and said the IMF is considering proposals for providing debt relief to countries hit by major disasters such as Haiti.

"2010 will see 65 million people added to the lines of poverty. Eighteen million in Africa ... this was inadmissible and that we should push for additional resources, additional support, within IMF, and within other international organizations," said Youssef Boutros-Ghali, the IMFC chairman and Egyptian Minister of Finance.

RESCUE FOR GREECE

Greece's spiraling debt crisis was also a major item on the agenda, as the country has asked for the activation of an EU-IMF bailout plan a day ahead of the Spring Meetings.

Addressing the media on Sunday after his meeting with Strauss- Kahn, Greek Finance Minister George Papaconstaninou said negotiations with the IMF for a 15-billion-euro (about 20 billion U.S. dollars) rescue will end rather soon.

Strauss-Kahn also said the talks had been very constructive and that he is confident negotiations with Greece will be concluded in time to meet Greece's need.

Greece has also asked for a 30-billion-euro aid from the European Union.

Papaconstaninou said he has been meeting with European partners as well as the finance ministers of the United States, Brazil, Russia and China, and implied that a deal might be possible in early May.

He stressed that Greece has started a three-year restructuring program to regain the confidence of European partners, the international community and the market.

Every item on the reform agenda has been started. The parliament has passed a bill to overhaul the tax system to increase government revenue. Tough measures have been taken to reduce the wage bill of the public sector by 10 percent in 2010, the minister said.

Some of the reforms have started to pay off, he said, as the country's deficit declined 14 percent in the first quarter.

Source:Xinhua

(Editor:梁军)

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