Sept. 24 (Bloomberg) -- Leaders from the Group of 20 nations are discussing a U.S.-backed plan to give emerging markets more power at the World Bank, officials from G-20 countries said.
Talks today and tomorrow in Pittsburgh include a proposal to boost developing economies’ voting rights at the Washington- based lender by 3 percentage points, said the officials, who spoke on condition of anonymity.
The discussion reflects agreement that countries including China should have more sway at the World Bank, International Monetary Fund and other global institutions as their influence in the world economy grows.
A shift toward emerging countries at the IMF and the World Bank “is the right thing to do and it’s going to happen,” U.S. Treasury Secretary Timothy Geithner told reporters in Pittsburgh today. “What we’re trying to do is have it happen in a way that’s going to be sensible for the institutions.”
Emerging markets are already set to have their share of the World Bank’s votes increased to 44 percent under a deal struck in February.
China has overtaken Germany to become the world’s third- largest economy with annual gross domestic product of about $3.9 trillion, according to Bloomberg data. China currently has a 3.7 percent voting share on IMF executive board decisions, compared with 3.2 percent for Saudi Arabia, whose economy is about one- eighth the size of China’s.
‘Further Recommendations’
G-20 leaders in April asked for “further recommendations” on the issue of handing even more sway to emerging markets. World Bank President Robert Zoellick said in China this month he has been “pressing to try to see if we can increase the share of the developing countries as close as we could to fifty.”
Talks in the run up to the Pittsburgh meeting have been focusing more on the IMF because it’s the primary concern for emerging economies, officials said. The 3 percentage point increase at the World Bank may therefore not gather enough support by tomorrow, one official said.
“Those institutions have been positioned by the G-20 as essential,” said Jo Marie Griesgraber, who heads New Rules for Global Finance Coalition, a nonprofit group in Washington. “If the institutions are not competent and credible, they cannot carry out their old mandates or their new mandates,” she said, urging leaders to make them more “representative, inclusive and accountable.”
