South Africa's finance minister said Monday he'll push for more international financial institution reforms as the World Bank picked the U.S. candidate for the financial institution's top post.
Pravin Gordhan spoke to reporters in Johannesburg hours before the World Bank's executive board on Monday picked Dartmouth University President Jim Yong Kim, who was nominated by the U.S. The other candidate was Nigerian Finance Minister Ngozi Okonjo-Iweala, who was supported by South Africa and other African and developing countries.
A third candidate, former Colombian Minister of Finance Jose Antonio Ocampo, withdrew Friday and threw his support to Okonjo-Iweala. However, even she acknowledged Monday her candidacy likely would fail.
Kim was expected to get the bank's presidency, which has always gone to an American. Its sister institution, the International Monetary Fund, has always been led by a European. Developing nations say the choices should be based on merit, not geography, as part of broader reforms to make the institutions more representative and democratic.
South Africa holds one of the three African seats on the 25-member World Bank board.
Gordhan said some progress has been made, pointing out that any country was able to nominate a candidate for World Bank president this year.
“It's no longer in the smoke-filled rooms of Europe and the United States that the spoils are shared,” he said of the nomination process. But he indicated he was concerned that “established powers” would determine the final choice.
When it comes to questions of transparency and whether choices are based on merit, “I think we're going to find that the process falls short,” he said.
“There's a lot more reforms to come,” he said, calling the World Bank and the IMF institutions “that are supposed to be serving the world's poor.”
He said among reforms he'll be pushing for is more African representation on the IMF board. He hoped to persuade Europe to give up seats.
Okonjo-Iweala, speaking in Abuja on Monday, said she likely wouldn't be the pick for the World Bank just before the decision was finalized.
“You know this thing is not really being decided on merit,” she said. “It is voting with political weight and shares and therefore the United States will get it.”
However, despite saying she received pressure to bow out of the process, Okonjo-Iweala said her candidacy made an impact in the process.
“We have shown we can contest this thing and Africa can produce people capable of running the entire architecture,” she said.
Gordhan heads to Washington this week for a meeting of G-20
finance ministers and central bank governors. Monday, he said the key question at that meeting is “whether we are any closer to having definitive answers, not temporary answers, on the euro zone crisis.”
He said there is concern whether the IMF has adequate resources to help Europe, and whether Europe itself is doing enough to keep the crisis from spreading.
“The traditional pool of growth is not operational now, nor will it be for a significant period,” he said.
South Africa's own efforts to increase growth and create jobs are being hurt by the global downturn. Gordhan said Monday unemployment in South Africa was likely to remain at a quarter of the work force for the next decade. Gordhan reiterated his pessimism that his government would meet its goal of creating 5
million jobs by 2020.
He called for more coordination and cooperation among government, business and labor, and a crackdown on corruption, which robs the country of funds that could be used for development.
He also expressed concern about an increasing number of unsecured loans being granted by South African banks. He called on consumers to be careful about spending and borrowing, but said his and other institutions had not yet determined it was time to ask banks to decrease lending.
“There is no crisis in the banking system,” he said. “Let's be absolutely clear about that.”
Despite his concerns, he said recent steps by international ratings agency to downgrade their outlooks for South Africa were unjustified.
The moves seem “to be an unfortunate casting of European shadows on the South African scene,” he said.
Some have pointed with concern to plans to create a national health system and other policies meant to help South Africa country's impoverished majority, Gordhan said. He said, “none of that will happen outside a framework of fiscal sustainability.” -
Sapa-AP