Advancing India’s push for a greater say for developing countries in the decision-making processes of multilateral lending institutions, Finance Minister Arun Jaitley has called for raising the stake for these nations to 50 per cent in the World Bank and its affiliate, International Finance Corporation (IFC).
In his address to the Bank’s Development Committee here, Jaitley also called upon to the Bank and its affiliates to expand their annual lending to $100 billion to help win the unfinished battle against extreme poverty and help developing countries achieve the “Sustainable Development Goals” unveiled at a UN summit last year.
Referring to the “Istanbul principles” for a bigger say for developing and transition countries (DTCs), he said: “We must accept that the time has come for raising partnership of DTCs (developing and transition countries) in the IBRD and IFC to 50 per cent.”
This move, he said, would require that economic weight captured by GDP remains the primary factor in the formula, with larger share of PPP (Purchasing Power Parity) based GDP of not less than 60 per cent.
The Bank’s International Development Association (IDA) plays an enormously useful role in financing development in low income countries, but recognizing IDA contributions in World Bank/IFC share capital has adverse impact on voting share of developing countries, Jaitley noted.
“Therefore, it would only be fair if a weight of not more than 10 per cent is given to IDA contributions in the dynamic formula,” he said, adding: “Such a weight should also recognize only recent contributions to act as rightful incentive for the emerging countries to contribute in IDA and should also recognize multiplier based on burden share and generosity.”
While mooting a big step-up in lending, the Finance Minister wanted the World Bank Group to undertake its General Capital Increase (GCI) and Selective Capital Increase (SCI) in a timely manner so as to maintain leadership position in the development landscape.
“The future of investment lending hinges upon adoption of pragmatic, developmental and utilitarian standards rather than divisive and political standards,” he said.
While noting that the Environmental and Social Standards discussions are extremely important, he said borrowing countries, including India, have provided the Bank team with a good reality check on the potential implications of the proposed draft standards. He expressed the hope that the Bank team would now propose the right kind of standards for consideration of the member countries.