Outside Review Supports World Bank Group Reform

A recently completed external review of the World Bank Group’s governance headed by former Mexican President Ernesto Zedillo provides a series of recommendations supporting further governance reforms, commends the Bank for expanding initiatives during the financial crisis, and supports strengthening the Bank’s financial capacity.

“I want to thank President Zedillo and the Commission for this valuable and timely input into our reform agenda. I requested this independent review by a highly respected and experienced set of individuals because I firmly believe that we can strengthen the good work of the World Bank Group by continuing to reform and improve. The 21st Century World Bank must be agile, inclusive, effective, innovative, accountable, and financially sound,” World Bank Group President Robert B. Zoellick said. “We look forward to discussing the Commission's recommendations with our shareholders and our broader stakeholder community.”

Zoellick called for the creation of a High Level Commission on Modernization of World Bank Group Governance in October 2008. The Commission made the following five recommendations:

· Enhance voice and participation

· Restructure the World Bank Group’s governing bodies

· Reform the leadership selection process

· Strengthen management accountability

· Strengthen the World Bank Group’s resource base

“These recommendations, along with other contributions, will help inform our report to the Development Committee in Spring 2010,” Zoellick said. He also thanked the Commission for proposing that the Bank’s financial capacity be strengthened to allow it to play a significant role in a post-crisis world.

Members of the High Level Commission on the Modernization of World Bank Group Governance:

· Ernesto Zedillo, former President of Mexico and Director of the Yale Center for the Study of Globalization

· Arminio Fraga, former President of the Central Bank of Brazil

· Rima Khalaf, former U.N. Assistant Secretary General, Director of the Regional Bureau for Arab States at the United Nations Development Program, and former Deputy Prime Minister of Jordan

· John KufuorJohn Kufuor, former President of Ghana

· Pascal LamyPascal Lamy, Director-General of the World Trade Organization (WTO)

· Sadako Ogata, President of the Japan International Cooperation Agency (JICA) and former United Nations High Commissioner for Refugees

· John F.W. Rogers, Secretary to the Board, Goldman Sachs

· Herman Wijffels, former World Bank Executive Director and former Chairman of the Board of Rabobank

· Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission, India

· Shriti Vadera, Minister for Economic Competitiveness and Small Business and former Parliamentary Under-Secretary of State in the Department for International Development, United Kingdom

· Zhou XiaochuanZhou Xiaochuan, Governor of the People’s Bank of China

Among the reforms already underway at the Bank are:

Expanding voice: Phase one reforms include: a new chair for Sub-Saharan Africa (bringing to three the number of seats for Sub-Saharan Africa on the Bank’s 25-Member Board); increase in developing countries’ shares in IBRD (International Bank for Reconstruction and Development, which focuses on middle income countries) to 44 percent. The Development Committee in Istanbul this month agreed to raise developing and transition countries voting power by at least a further 3 percentage points, on top of the phase one reforms, bringing their share above 47 percent. A voice review by the Board of the International Finance Corporation (IFC) is also under discussion.

Restructure the World Bank Group’s governing bodies: A Board-led internal governance review has set out a work program to improve Board operations and client services.

Leadership selection process: In October 2008, shareholders reached an important consensus that selection of the World Bank Group President will be merit-based, transparent, and open.

Strengthen management accountability: The Bank is undertaking an institutional review of independent evaluation to assess gaps and overlaps in the system.

Financial capacity: WBG has developed a balanced package of financial measures to address IBRD/IFC capital constraints, and presented a number of options for an injection of $3-5 billion in IBRD paid-in capital. This would be the first capital increase in 20 years. IFC is also looking for a capital increase to continue to play a leading role in private sector development, including frontier markets, during the crisis and beyond.(EOM)