The joint World Bank-IMF advisory body, known as the Development Committee, committed to the G20’s call for more resources for the Bank to help developing countries respond to the global economic crisis.
Concluding its first day of talks on the Bank’s work and impact at the 2009 annual meetings, the committee expressed support for a general capital increase, a multibillion multilateral food trust fund, and a new crisis facility for the world’s 79 poorest countries.
The Development Committee also agreed to “voice” reform to ensure developing countries get a bigger say in how the institution is run—an increase of at least 3 percentage points in voting power, in addition to the 1.46 percent already agreed. This would give them a share next year of at least 47 percent.
In a statement issued Monday, the Development Committee set a definite decision point for shareholders for Spring 2010 on IBRD and IFC capital needs and “committed to ensure that the World Bank Group has sufficient resources to meet future development challenges.”
The committee noted the Bank’s “vigorous response” to the crisis, including a tripling of IBRD commitments to $33 billion this year and IDA reaching a historic level of $14 billion. They also said that IFC, which has invested $10.5 billion and mobilized an additional $4 billion through new initiatives, “combined strong innovation with effective resource mobilization.”
Global attention is mounting about this year's Annual Meetings of the Bank and the Fund in Turkey. From Egypt, where I am on MIGA business on my way to Turkey, the discussion is around whether the meetings will advance the G20 communiqué in terms of substance and specific implementation measures.
I spent two days earlier in the week with global private equity investors. Their anxiety mostly revolves around how financial sector regulation will evolve over the coming months. They feel the cold wind of oversight, and the discussion revolves around two competing plans for financial regulation, one emanating from Brussels and the other from Washington. But everyone accepts that an overhaul of financial sector regulation is the unfinished business from last year's financial crisis, even though views differ on the extent and content of the changes needed. My own concerns are whether the world's piecemeal international governance system will enable a coherent global regulatory structure to emerge from the wreckage of last year's financial meltdown.
In Istanbul I'm looking forward to taking the temperature of the financial world. I hope and expect the meetings to be more subdued than in past years, because we have some serious business to do; and many players who were around at the Singapore meetings are no longer with us (Lehman, Bear Stearns, Merrill, AIG...).
It's a new world.
Given that Asia is now widely seen as leading the world out of the crisis, it is fitting that the role of Asia was more prominently recognized in the global economic system in the recent G20 meeting held in Pittsburgh. Since we last looked in July, the outlook for the emerging markets of East Asia has continued to brighten. The latest regional forecasts come from the Asian Development Bank in its Asian Development Outlook (pdf) published last week. It points to “the rapid turnaround in [Asia’s] largest, less export-dependent economies” and predicts that “the regional economy is now poised to achieve a V-shaped rebound.” These are very positive words indeed! As the graph below shows, the ADB has in fact upgraded its growth forecasts for a number of economies for 2009.
Although the signs are pointing upwards, performance is still mixed in a number of key areas.