Washington, October 22: An expert group that included India has suggested a number of steps to reform the World Bank Group’s governance while commending the Bank for expanding initiatives during the financial crisis and supporting strengthening its financial capacity.
Headed by former Mexican President Ernesto Zedillo and including Deputy Chairman of India’s Planning Commission Montek Singh Ahluwalia, the 12 member group has made five key recommendations. These are: Enhance voice and participation; Restructure the World Bank Group’s governing bodies; Reform the leadership selection process; Strengthen management accountability; and Strengthen the World Bank Group’s resource base.
“The 21st Century World Bank must be agile, inclusive, effective, innovative, accountable, and financially sound,” said World Bank Group President Robert B. Zoellick who had set up the expert group in October 2008.
“These recommendations, along with other contributions, will help inform our report to the Development Committee in Spring 2010,” Zoellick said.
He also thanked the Commission for proposing that the Bank’s financial capacity be strengthened to allow it to play a significant role in a post-crisis world.
According to the Bank some reforms are already underway. These are: Expanding voice: Phase one reforms include an increase in developing countries’ shares in IBRD (International Bank for Reconstruction and Development, which focuses on middle income countries) to 44 percent.
The Development Committee in Istanbul this month agreed to raise developing and transition countries voting power by at least a further 3 percentage points, on top of the phase one reforms, bringing their share above 47 percent. A voice review by the Board of the International Finance Corporation (IFC) is also under discussion.
Restructure the World Bank Group’s governing bodies: A Board-led internal governance review has set out a work programme to improve Board operations and client services.
Leadership selection process: In October 2008, shareholders reached an important consensus that selection of the World Bank Group President will be merit-based, transparent, and open.
Strengthen management accountability: The Bank is undertaking an institutional review of independent evaluation to assess gaps and overlaps in the system.
Financial capacity: WBG has developed a balanced package of financial measures to address IBRD/IFC capital constraints, and presented a number of options for an injection of $3-5 billion in IBRD paid-in capital.
This would be the first capital increase in 20 years. IFC is also looking for a capital increase to continue to play a leading role in private sector development, including frontier markets, during the crisis and beyond.
–Agencies