Tuesday, April 27, 2010

Votes in World Bank decisions change

As a part of the World Bank's spring meetings changes in the voting shares for member countries were made. A country will get more or less votes on decisions made by the Bank loosely based on how much capital they contribute.

It has long been a problem that only the developed countries have a say in how the Bank spends it's money. It creates a system of the rich countries telling the poor ones what they need instead of the poor nations getting what they want from the Bank.

Voting shares were adjusted in the spring meetings and the Bank says they have increased the power that poor nations have. However, critics of the lending institution says it is some tricks with mathematics that only give an appearance of a greater say for poor nations.

From the IPS, writer Matthew Berger explains the Bank's decisions further.

The share of voting power allotted to low- and middle-income countries on the board of the bank's International Bank for Reconstruction and Development will rise from 44.06 to 47.19 percent.

That number, however, may not be accurate, according to some development and international financial institution watchdog groups. At issue is the definition of what constitutes a low- or middle-income country - or "developing" or "transition" economy - and thus whether certain countries should be included within that 47 percent figure.

The classification used by the bank is based on data in the International Monetary Fund's World Economic Outlook report and includes 16 countries which should not be termed either "developing" or "transition", says the London-based Bretton Woods Project.

These countries are all classified by the World Bank as high-income, it says, and together they hold five of the 47 percent. Sunday, the organisation characterised "the final real share of voting power for developing countries (excluding high income economies)" as just over 42 percent.

"It's smoke and mirrors to count Saudi Arabia and Hungary as developing countries and then claim a three-percent shift in voting power will give poor countries more say," Elizabeth Stuart of the development group Oxfam said Sunday. "The World Bank is asking for a lot more money, but it hasn't got serious about reform."

Jo Marie Griesgraber, executive director of New Rule for Global Finance, an NGO that seeks to reduce poverty and inequality through promoting stable global financial systems, called the changes announced over the weekend "marginal". She agreed with the Bretton Woods Project analysis that "the way you get to this 47 percent is by a distortion of numbers or a misinterpretation".

"We need a really candid examination of the numbers," Griesgraber said.

Oxfam notes that of the 47 countries in sub-Saharan Africa, more than a third have lost some of their voting share as a result of the reforms and 60 percent have stayed the same. Nigeria and South Africa, the largest regional economies, had the most significant cut in quotas.

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