Nigeria Content Online

Members of the
World Bank agreed at the weekend to support a $5.1 billion increase in
its operating capital, the largest increase in general financing since
1988, and to give developing economies a greater say in running the
anti-poverty institution.

Under the changes,
China will become the bank’s third largest shareholder, ahead of
Germany, after the United States and Japan. Countries like Brazil,
India, Indonesia and Vietnam will also have greater representation.

“We are grateful to
our shareholding countries for this strong vote of confidence,” the
bank’s president, Robert B. Zoellick, said at the conclusion of the
spring meetings of the World Bank and the International Monetary Fund.

The bank’s 186
members also agreed to support a reform package that calls for greater
openness and disclosure of information and improvements in managing
risks and measuring results.

The World Bank has
made $105 billion in financial commitments since July 2008 in response
to the global economic turmoil. The new capital in essence, allows the
World Bank to maintain its programs at their level before the crisis.

“We could start to
see this last year, at the time of our annual meeting, that unless we
could get additional capital infusion, we wouldn’t be able to continue
this high lending volume,” Mr. Zoellick said in an interview on Friday.
“And indeed, even coming out of the crisis, we would be in a position
where we’d have to come back below precrisis levels.”

In a Global
Monitoring Report, released Friday, the bank reported that the economic
crisis had slowed the pace of poverty reduction in developing
countries. As a result of the crisis, 53 million more people will
remain in extreme poverty by 2015 than otherwise would have, the report
found. Even so, the report projected that the number of people in
extreme poverty – defined as living on less than $1.25 a day – would be
920 million in 2015, a significant decline from the 1.8 billion in 1990.

Some developing
countries sought a bigger capital increase, as other development banks
have received. But the wealthier nations, which are squeezed, resisted
such a move.

Timothy F.
Geithner, the United States Treasury secretary, said Mr. Zoellick had
“made a strong and compelling case” for the money that was approved. He
pledged to seek Congressional support for the United States’ share of
the capital increase, $586 million or about $117 million a year for
five years.

“For every dollar
the United States contributes to paid-in capital for the World Bank,
$26 worth of assistance is delivered,” Mr. Geithner said Sunday.

Mr. Zoellick carefully devised the capital increase and voting changes to be adopted together.

The $5.1 billion in
so-called paid-in capital, which the bank can use for day-to-day
operations, will bring the bank’s cash on hand to about $40 billion. Of
the $5.1 billion, developing countries will contribute $1.6 billion in
connection with a shift in representation that will give them 47.19
percent of voting power, up from 44.06 percent. The actions fulfill a
pledge the bank’s members made in Istanbul in October.

In 2008, the bank’s
members approved a smaller shift of 1.46 percent of voting power to the
developing countries from the wealthy ones and added a 25th seat on the
bank’s governing board, raising to three the number of seats for
sub-Saharan Africa.

All told, the
cumulative shift of 4.59 percent of voting power amounts to the
greatest realignment in representation at the World Bank since 1988.

“As the developing
countries gain more shares, they have to pay for them,” Mr. Zoellick
said in the interview. “Part of the good story here is a burden-sharing
story.” The bank’s members approved on Sunday an $86.2 billion general
capital increase, bringing the bank’s total subscribed capital, not
counting about $26 billion in reserves, to $276.1 billion. But except
for the $5.1 billion, that new money is “callable capital,” which
resides with the member countries but can be drawn upon in an
emergency. (The bank has never had to do so.) The callable capital lets
the bank enjoy a top-notch credit rating and borrow at favorable rates.
All but roughly $40 billion of the $276.1 billion is callable.

The bank’s members
said it should redouble its focus on helping the poor, especially in
sub-Saharan Africa; invest in agriculture and infrastructure; promote
global “collective action” on climate change, trade and other
priorities; combat corruption; and prepare for crises.

Mr. Zoellick, who
served as the United States trade representative and then as deputy
secretary of state under President George W. Bush, said in the
interview, that the less wealthy countries were leading the global
economic recovery, while the United States, Europe, and Japan had
rebounded more slowly.

“A lot of growth is
coming from the developing world, and so the financing we do in the
developing world is now beyond charity and social solidarity – it’s a
question of self-interest,” he said. “They have become sources of
demand.”

The New York Times