Both institutions’ (IMF & World Bank) largest and most significant shareholder is the US. Both institutions’ shareholding has changed (the IMF has undergone 14 quota overhauls), but a US veto can prevent any resolution from passing. With China being the second-largest economy in the world and India becoming the fifth-largest, the global economy has undergone substantial change. Italy is not one of the eight largest shareholders at the World Bank, while India is ranked seventh.
Source: FRANCE 24 English
In theory, emerging nations could access the global bond markets on their own as the world’s capital markets developed and cross-border transfers became more simple after the demise of the Soviet Union. But, the World Bank might raise and lend money at lower interest rates and support the money with wise policy recommendations for its wise application. The Bank has acquired a variety of development lessons throughout the course of its seven decades of existence and activities, amended and improved them, and is now a helpful library of development instruments and policies that have succeeded and failed.
In order to lower the cost of capital, it has expanded its functions to create five support systems: it provides grants or loans at no cost to the world’s poorest nations; lends money to middle-income nations like India at market-efficient rates; co-invests in private sector companies; guarantees loans for viable projects in developing nations; and offers an arbitration and dispute resolution service for investment disputes.
The IMF and the World Bank need to leave the past behind and firmly embrace the realities of the present. To better reflect the current distribution of economic power around the world, new organisations like the G20 have developed. Their recommendation to modify the voting rights in the Bretton Woods twins must be honoured.
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