Peru: Finance Minister Arun Jaitley has made a strong case for raising shareholding of developing nations, including India in the World Bank Group to reflect their share in the global economy and demanded a significant hike in the capital to meet growing financing needs.
Stating that the demand for development finance continues to be very strong, he quoted a bank’s report admitting inability to support elevated levels of lending beyond 2018. IFC – an arm of the World Bank – is already capital constrained. Also, there is the additional challenge of mobilising over $100 billion per year for climate finance.
Speaking at the Plenary Meeting of the Development Committee here, he emphasised the need for bigger financing and implementation plans by the World Bank Group to achieve the Sustainable Development Goals (SDGs).
India, he said, expects a dynamic formula for shareholding of World Bank to be finalised by Annual Meeting 2016.
The formula should incorporate “elements which help enhance the voice, role and voting share of the developing countries and reflect their increased share in global GDP and their contribution to building the bank’s reserves,” he said. Jaitley said as the share of the developing and transitioning countries in the world GDP increases from 39% in 2008-2010 to 49% in 2013-15, “the shareholding realignment should reflect the same and be completed by 2017.”
Development Committee is the ministerial-level forum of the World Bank Group and the IMF for intergovernmental consensusbuilding on development issues.
Jaitley represented the constituency consisting of the countries –Sri Lanka, Bangladesh, Bhutan and India. India, Bangladesh and Bhutan are early dividend countries and are taking steps to leverage their demographic transition to achieve SDGs, he said. Economic Affairs Secretary Shaktikanta Das, who also attended the IMFWorld Bank annual meeting here tweeted, “India called for governance reforms in both institutions to reflect growing share of developing countries in global GDP.”
Bucking the trend Jaitley said, “I must, however, add that the countries in my constituency are bucking the trend and are expected to post reasonably strong growth with India likely to grow at around 7.5%, Bangladesh at 6.3%, Sri Lanka at 6.5% and Bhutan at 7%,” he said. With expected growth of only 4.3% for 2015, the outlook for the developing countries has deteriorated.
Terming SDGs as ambitious, he said they would require ambitious financing and implementation plans. “Particularly, the World Bank and IFC, will have to significantly increase their level of finance to support the SDGs,” he said adding the space created for additional lending by ‘margins of manoeuvre’ and other measures x collections in the first six months of the current fiscal year.
On fiscal deficit Jaitley said that the country is firmly on the path of fiscal discipline and has contained the fiscal deficit at 4% (lower than targeted) last year. Jaitley said that the FDI flows into the country have been robust. He cited reports in foreign media that during the last six months, India was the leading destination for investments in greenfield projects, demonstrating the high degree of confidence of the global investors.
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