The International Monetary Fund backed internal reforms to give low-income countries a greater voice and the World Bank put agriculture at the heart of its anti-poverty mission at annual meetings here this weekend.
The 63-year-old multilateral institutions convened after a turbulent year in which both saw abrupt changes in leadership - the World Bank because of scandal, followed by a surprise resignation at the IMF - that thrust questions about their legitimacy and relevancy into the spotlight.
The tacit agreement that major European countries select the IMF chief and the United States picks the Bank president once again came under fire from developing and emerging-market countries which argue the 185-nation institutions are out of step with current economic realities.
Under pressure, IMF policymakers on Saturday approved internal reforms to give under-represented non-western countries a stronger voice and agreed that the Fund must shore up its shaky finances, pledging to cut costs and boost efficiency.
In a final statement, the policy-setting committee said reforming the IMF "should enhance the representation of dynamic economies, many of which are emerging-market economies, whose weight and role in the global economy have increased."
Such countries should see their voting share increased, the committee said, adding that "the voice and representation" of poor countries would also be strengthened.
It said all elements for an internal reform package, including an increase in the quotas that determine a member's voting rights, should be in place by the time of its next meeting in April 2008.
The distribution of quotas is determined according to complex mathematical formulas. Moves to adjust the balance of power have been the subject of sometimes bitter debate, with certain industrialised nations reluctant to give ground to emerging-market members.
While the action taken Saturday was hailed by some IMF officials as a clear advance, outgoing IMF Managing Director Rodrgio Rato of Spain cautioned that "we are in an interim moment." "Today there has not been any final agreement," he said, adding that details of the reform still needed to be thrashed out. The committee also said "a new income model" should be drafted for debate at its April meeting.
The IMF reform drive launched in 2005 by Rato, who is leaving office nearly two years before his five-year mandate ends, passes on November 1 into the hands of Dominique Strauss-Kahn, a former Socialist finance minister of France who has vowed to pursue reforms "without delay."
At the World Bank, president Robert Zoellick on Sunday launched a major shift in the development lender's strategy, anchoring agriculture at the center of poverty reduction while mobilising private financing in the battle. "With 75 percent of the world's poor living in rural areas, improving agriculture's performance remains crucial to overcoming global poverty," Zoellick told Bank policymakers.
The Bank's annual World Development Report this week "shows that growth originating in agriculture is four times more effective at raising the incomes of the extreme poor than growth in other sectors," said the former US trade chief and Goldman Sachs executive.
The initiatives are among the first proposed by Zoellick after he took office on July 1 after the resignation of Paul Wolfowitz in the midst of a favouritism scandal.
In the report the Bank pledged to boost lending to the farm sector in poor countries, where an estimated 900 million people live on less than a dollar a day, after allowing it to decline in the 1980s and 1990s. Commitments this year are expected to reach 3.1 billion dollars.
Zoellick also floated this week a controversial proposal that would allow private-sector business to help finance the International Development Association, the Bank's main lender to the most impoverished countries. Some see that plan as a conflict of interest. The World Bank is "a public institution accountable to citizens," not to shareholders, said Sebastien Fourmy of Oxfam International.
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