Global economic and financial leaders at the World Bank-International Monetary Fund meet next in Apr 2011. They are likely to follow up on decisions taken at G20 meetings in 2010, debate measures to curb currency manipulation, prod China to devalue its yuan, voice concern about unsustainable debt, and fine-tune recent reforms made by both bodies: some reforms gives developing member countries more clout. Ways and means remain elusive.
The World Bank explained in October that China's stubborn defense of the yuan comes amid growing fears of a "currency war," in which nations, seeking to export their way out of the downturn, are trying to cap or lower their currencies to make their exports more competitive. According to the Bank, China, the world's biggest exporter and second-largest economy, faces growing pressure from major trading partners to let its currency appreciate at a faster rate against the dollar. Beijing has rejected calls for a rapid rise in its currency, arguing such a move would destroy domestic businesses, trigger massive layoffs and disrupt the global economic recovery. The Bank counters that a stronger yuan exchange rate is in China's interests and would help the country rein in inflation and boost domestic consumption. G20 finance ministers pledged in October that they would not intervene in the currency markets to obtain competitive devaluation advantages. The exchange rate for a currency has no effect on the domestic market, they argued, but a weak currency can give exporters a competitive edge and also price importers out of the market. Debt in advanced economies are among the newest of IMF concerns. IMF analysis shows that advanced economies' fiscal deficits will average about 7 per cent of gross domestic product in 2011, and the average public debt ratio will exceed 100 per cent of GDP for the first time since the end of World War II. "As is increasingly obvious, such afiscal trend simply is not sustainable," said IMF Deputy Director-General John Lipsky on Mar 21. One of the concrete measures to emerge from the 2010 IMF-World Bank meetings and the meeting of G20 finance ministers in October was an agreement to give emerging economies more of a say in IMF affairs. At a meeting in South Korea, they agreed a shift of about 6 percent of IMF votes towards some of the fast-growing developing countries. According to a BBC report, those nations will also have more seats on the IMF's Board, while Western Europe will lose two seats. But the US will retain the veto it has over key decisions.'; The Bank also has made more room for emerging and transitional economies in the decisions of the organization. The Bank's three managing directors and Chief Economist are for the first time leaders from developing countries. Another reform opens up Bank decisions to public scrutiny. The Bank's Access to Information Policy took effect on 1 Jul 2010. According to World Bank President Robert Zoellick, it "constitutes a major shift in the Bank's approach to information disclosure, transparency, sharing of knowledge, and accountability.'; The World Bank, made up of two unique development institutions owned by 186 member countries -- the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) -- provides financial and technical assistance to developing countries. The International Monetary Fund (IMF) is an organization of 186 countries that works to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth and reduce poverty. About 10,000 people attend IMF/WB meetings officially, and thousands more unofficially. The unofficial thousands usually include anti-globalization and anti-capitalism demonstrators. (UPDATED Mar 2011)
Date written/update: 2011-04-18