FM flays World Bank’s shift in focus
THE current emphasis in the World Bank to often hold back loans as part of its anti-corruption strategy has been sharply criticised by finance minister P Chidambaram.
By TNN |
NEW DELHI: THE current emphasis in the World Bank to often hold back loans as part of its anti-corruption strategy has been sharply criticised by finance minister P Chidambaram.
“There is an unusual focus on governance and anti-corruption issues in the Bank’s strategy,” said the minister at the Commonwealth finance minister’s me-eting on Wednesday at Colombo.
He said while the issue is important, “We would be unhappy if the new focus tends to obscure or negate the Bank’s historical development-centric approach.”
The minister’s comments come a few days after the World Bank resumed its lending for three health projects in India, that it had held up for almost a year.
Projects worth $662m were renewed after “intensive efforts were made to clarify any misgivings that the World Bank may have had,” said a finance ministry release on the occasion. Mr Chidambaram also said on Wednesday the new focus could penalise some of the poorer countries, with weak governance structure.
Speaking about the role of IMF, he said there has to be fundamental reforms in its quota structure.
“India has always held that the developing world deserves to have much greater voice in the management of the international financial institutions.
“It is widely believed that the present quota formula of the IMF is hopelessly flawed and outdated,” he added.
He also said there was a need for a high access contingent financing instrument for middle income countries, that have stepped into the international capital markets.
“Many emerging market eco-nomies have raised significant amounts in the international capital markets. There is a need to safeguard these economies from any vulnerability to changes in market sentiments or reversal
of capital flows by using such instruments.”
“There is an unusual focus on governance and anti-corruption issues in the Bank’s strategy,” said the minister at the Commonwealth finance minister’s me-eting on Wednesday at Colombo.
He said while the issue is important, “We would be unhappy if the new focus tends to obscure or negate the Bank’s historical development-centric approach.”
The minister’s comments come a few days after the World Bank resumed its lending for three health projects in India, that it had held up for almost a year.
Projects worth $662m were renewed after “intensive efforts were made to clarify any misgivings that the World Bank may have had,” said a finance ministry release on the occasion. Mr Chidambaram also said on Wednesday the new focus could penalise some of the poorer countries, with weak governance structure.
Speaking about the role of IMF, he said there has to be fundamental reforms in its quota structure.
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“India has always held that the developing world deserves to have much greater voice in the management of the international financial institutions.
“It is widely believed that the present quota formula of the IMF is hopelessly flawed and outdated,” he added.
He also said there was a need for a high access contingent financing instrument for middle income countries, that have stepped into the international capital markets.
“Many emerging market eco-nomies have raised significant amounts in the international capital markets. There is a need to safeguard these economies from any vulnerability to changes in market sentiments or reversal
of capital flows by using such instruments.”
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