Time for change:
European civil society open statement on
governance reform of the World Bank
The World Bank has a mandate to combat poverty and a focus on developing
countries, where it often wields enormous power. Yet developing countries have little
say in how it is run. Civil society organisations and others have catalogued the
Bank’s shortcomings in its democracy, transparency, accountability and legitimacy.
It is time for fundamental reform to redress the democratic deficit at the World Bank,
and give real power to the developing countries the Bank is supposed to support.
European governments, who hold eight chairs and have over 30% of the vote at the
Bank, have a special responsibility to push for reform. We, the undersigned
organisations, call upon our European governments to back a progressive proposal for
transformation of the World Bank that includes the key reforms below.
The following two reforms are fundamentally important; without progress in these
areas, any deal cannot be regarded as a success.
1. Parity in voting rights
The World Bank, as a development institution, has a voting structure which
undermines its effectiveness and legitimacy. This year’s IMF quota reforms were
inadequate and are not a good model for the Bank, which has a very different purpose
from the IMF. The distinct nature of the Bank was recognised in the 2008 spring
meeting Development Committee Communiqué. We support developing country
government calls for the introduction of parity of voice between developed, and
developing and transition countries, within an agreed timeframe. This should allow
for voting shares to much better reflect population size and recognise that the real
impact of World Bank activities is felt in the developing world.
Voting rights reform at the IFC
The International Finance Corporation, the World Bank’s private sector lending arm,
is a major player in many developing countries, and its lending and influence are
growing. However it has the most imbalanced governance structure of any of the
World Bank Group’s arms. It is therefore crucially important that reforms to World
Bank governance to achieve the principle of parity of voice between developed,
developing and transition countries should also include the IFC.
2. Greatly improved transparency
The World Bank makes decisions which deeply affect the lives of people across the
world. Citizens have a right to accurate, timely, and accessible information about the
activities of the Bank and the positions their governments are taking within the
Bank’s governing structures. We support the Global Transparency Initiative’s
demand that the Bank move towards a presumption of disclosure for all information,
with a strictly limited regime of exceptions. Two key preliminary steps that would
demonstrate commitment to transparency would be: (a) the publication of the
transcripts of board meetings, and (b) the adoption of formal voting at board
meetings, with voting records published.
The following three simple steps should be taken rapidly to demonstrate good faith.
These changes should not be tied any agreement on changes in voting rights:
a. A third chair for Africa
It is scandalous that Africa, the continent most affected by the World Bank has only
two seats at the board. Having an additional African chair would move towards a
fairer allocation of board seats, enhance the effectiveness of the Bank, and signal a
commitment to making the Bank more accountable to African countries.
b. Merit-based selection of the president
The current arrangement, where the USA automatically appoints the World Bank
president, is completely unacceptable in the modern world. European governments
have rightly announced their intention to give up their control over the appointment of
the IMF Managing Director: it is time for the US to do the same. We demand a
transparent, democratic, merit-based process for selecting the heads of multilateral
institutions, including the World Bank. This should involve all member countries
equally and all significant stakeholder groupings. Geographical diversity and gender
equality in top positions should be actively encouraged.
c. Helping IDA countries boost their voting rights
Developing countries do not always have the resources to take up their IDA
subscriptions, and therefore their voting rights are reduced. A simple, fully-funded
mechanism to allow them to do this should be introduced.
European consolidation
If developing countries are to increase their votes and number of seats on the board
then developed countries will have to reduce theirs. Europe is the most overrepresented region, with 8 out of 24 seats on the board. Consolidating these seats
would not only free up space for developing countries to take additional seats, but
also dramatically improve European coordination and coherence at the Bank.
By pushing for the above set of concrete, achievable reforms, European governments
can demonstrate their commitment to transforming the international financial
architecture so that it becomes more democratic, accountable and legitimate. These
reforms are a fundamental pre-requisite for ensuring that international institutions can
play an effective role in the global fight against poverty.
Signatories