WASHINGTON: US Treasury Secretary Timothy Geithner on Sunday said that World Bank members had agreed to give emerging nations more say in how the bank is run and how its funds are disbursed.
"The new formula will better reflect the weight of the developing and transition countries in the global economy, while protecting the voice of the smallest and poorest countries," he said.
Geithner added that Washington would not seek an increased share in the bank’s new governance structure as a sign of support for the shift in influence to developing countries.
"Because we believe this overall outcome merits our strong endorsement, the United States agreed not to take up its full shareholding in this new arrangement," his statement said.
Japanese deputy finance minister Rintaro Tamaki said in his own statement that "as a result of the voice reform this time, Japan will shoulder a burden of the largest reduction in the voting share, in order to contribute to realizing a shift of the voting share to the developing and transition countries."
Tamaki added that "it is the first time for Japan to have our voting share reduced since we joined the Bank in 1952."
World Bank president Robert Zoellick had forecast earlier that the bank’s spring meeting on Sunday would represent a turning point after "2009 saw the end of what was known as the Third World."
"Economic and political tectonic plates are shifting," he noted, and added: "We can shift with them."
Zoellick had said the World Bank’s 186 shareholders will be asked to approve a "once-in-a-generation request" to raise the bank’s capital by $5 billion, more than half of which would come from developing countries.
The bank also planned to "decide on whether to give developing countries a bigger say in the running of the institution," he said ahead of the meeting, as the iconic world body reflected a shift in influence away from traditional global powers.
He said this month that with the bank’s first capital increase in more than 20 years, "shareholders face a decision to strengthen the Bank Group, or allow it to wane in influence, losing an effective multilateral institution and leaving it poorly resourced to cope with whatever comes next."
The capital hike is aimed at covering some of the more than $100 billion in bank commitments made since July 2008 for loans, subsidies, financial sector investments and guarantees for private projects.
A similar shift in influence is being seen at the International Monetary Fund, which held its own meeting Saturday, even though the IMF was criticized for lacking ambition by a key emerging country, Brazil.
Changes at the IMF would essentially benefit China at the expense of European Union member countries which now have a strong voice on the Fund’s executive board.
IMF managing director Dominique Strauss-Kahn told a press conference on Saturday he believed "the political will was strong" to address "a long list of questions," including the board’s size and who would fill the post he currently holds.
A statement by Geithner said: "We need to consider measures to make the executive board more representative and effective," and backed a plan to eliminate seats while preserving those held by emerging market and developing countries.
"The goal is to achieve legitimate representation based on countries’ economic weight in the world," Geithner said.
His Brazilian counterpart Guido Mantega expressed dismay, however, at "the lack of ambition" in IMF plans to rebalance how much its 186 members paid in and their subsequent level of representation, and slammed "resistance to change."
And the international aid group Oxfam agreed that "reform of the IMF’s governance is happening far too slowly."
"If the Fund is really an institution for the 21st century, where are the changes that will finally give poor countries a voice in policies that affect their futures," Oxfam spokeswoman Elizabeth Stuart asked.
At the IMF’s meeting Saturday, Europe faced mounting pressure to quickly bail out debt-stricken Greece on Saturday amid fears the crisis could spread and threaten the global economic recovery.
Focus quickly shifted to the speed of that rescue effort, as economic powers worried the crisis could spread to other eurozone nations, with Portugal, Italy, Spain and Ireland all in the firing line.
Geithner pressed Greek Finance Minister George Papaconstantinou and EU officials to quickly implement fiscal reforms and roll out the bailout.
