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China urges quicker reform by IMF, WB

(Xinhua)
Updated: 2009-10-06 20:42

ISTANBUL: China's Finance Minister Xie Xuren Tuesday urged the International Monetary Fund (IMF) and the World Bank to speed up reforms that would give developing countries a bigger voice in the two institutions to reflect changing economic weight of their members.

"We call on all parties to work even more closely together and take actions to push for substantive progress in reform of the two institutions," said Xie in a speech to the plenary session of the IMF and World Bank annual meetings held in Istanbul, Turkey.

He was referring to the joint proposal by the Group of 20 leaders in a summit last month to increase developing countries' voting power and quota in the IMF and the World Bank by at least 5 percent and 3 percent respectively.

The IMF should speed up its quota reform and complete its 14th General Quota Review before January 2011 to realize a significant transfer of quota and voting power to emerging markets and developing countries so as to enhance its legitimacy and effectiveness, said Xie.

He also urged the IMF to set up an automatic adjustment mechanism for its quota in the mid- and long-term to timely reflect the evolving weight of each member in the global economy.

China also expects the World Bank to reform towards the ultimate goal of parity voting power between developed and developing members in it as early as possible, he said.

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The two institutions should continually increase developing countries' representation in its staffing structure, in particular the senior management, and make the selection process of their leaders open, transparent and merit-based, said Xie.

Xie's call echoed those of IMF and World Bank chiefs.

The IMF aims to shift quota shares towards dynamic emerging markets and developing countries by at least 5 percent from over- represented to under-represented countries by January 2011, but implementation of past reform is lagging, said IMF Managing Director Dominique Strauss-Kahn at Tuesday's meeting.

"Only 36 out of the needed 111 countries have passed the legislation related to the 2008 quota and voice reform," said Strauss-Kahn. "I urge countries to move ahead here as quickly as possible."

During the meeting, World Bank President Robert B. Zoellick said the Bank's shareholders should give developing countries half of the voting rights in the Bank, beyond the current reform target of increasing their share to at least 47 percent.

Xie urged the IMF to strengthen its surveillance on developed economies with important financial centers and their spill-over effects and called on the World Bank to ensure its capital adequacy in order to expand its financial assistance to developing countries.

"We oppose shifting the pressure of financial deterioration and shortage of concessional funds onto developing countries by increasing IBRD (International Bank for Reconstruction and Development) lending price," said Xie.

The IBRD is the Bank's institution that provides loans, guarantees, risk management products, and analytical and advisory services to reduce poverty in middle-income and creditworthy poorer countries.

"As a member of international community, China is willing to deepen its cooperation with the World Bank and IMF on the basis of mutual benefit to achieve a balanced and sustainable global development," said Xie.  

The IMF and World Bank annual meetings opened the plenary session here Tuesday, with central bank governors and finance ministers from more than 180 countries focusing on ways to restore global growth and internal reforms of the two institutions.