As finance ministers, central bankers, and development officials convene in Washington for the World Bank and IMF Annual Meetings from October 13 to 18, 2025, they will grapple with a longstanding issue: aligning the governance of the Bank with the realities of today’s global economy. Once again, a scheduled review of shareholding—this time the highly anticipated 2025 round—faces a stalemate, a topic elaborated upon in our new INET Working Paper.
For nearly eight decades, the Bank has maintained a clear principle: voting power should reflect each country’s relative weight in the global economy. However, this principle is increasingly at odds with reality. China, India, and Indonesia—three of the four most populous nations—remain significantly underrepresented, while several European nations with smaller economies wield disproportionately large influence.
Fifteen Years of “Voice Reform”
The World Bank initiated a reform process between 2008 and 2010, transferring nearly five percentage points of voting power from advanced countries to developing and transition economies (DTCs). At that time, leaders indicated that this was just the beginning; future reviews, scheduled every five years, would continue to rebalance the power dynamic.
However, subsequent reviews have yielded little progress. The 2015 review resulted in only a statement of principles, the “Lima Principles.” In 2018, expectations rose, but the reform delivered a mere 0.5 percentage point shift. The 2020 review, overshadowed by the pandemic, resulted in no changes. Now, as 2025 approaches, shareholders are once again faced with the critical question of whether this reform process is genuine or merely performative.
The Geopolitics of Obstruction
So why has progress been so limited? A significant part of the answer lies in the geopolitical rivalry between the United States and China, which has intensified over the past decade. Washington staunchly opposes any substantial increase in China’s shareholding, fearing it would grant Beijing greater influence over this leading development finance institution. Many European governments, eager to avoid conflict with the US, discreetly support this stance.
Japan is likewise resistant, unwilling to allow China to surpass its own voting share—a crucial symbol of regional status. Meanwhile, France and the UK utilize innovative accounting methods to maintain their privileged single seats on the Board of Executive Directors.
This resistance reflects a deeper reality: the Bank is predominantly viewed by its major shareholders as a Western-led institution. As one Executive Director bluntly stated, “The Bank is first and foremost a bank. Since when do the customers control a bank?”
Institutional Lock-In
However, geopolitics is only part of the equation. The Bank’s Articles of Agreement afford each member a “preemptive right” that allows them to maintain their shareholding in any capital increase. Consequently, countries facing dilution may opt to reject changes and insist on preserving their previous share. This effectively enshrines the status quo: achieving genuine realignment necessitates near-unanimous agreement.
The result is a cycle of protracted negotiations that yield only minor adjustments, often hailed as progress. Meanwhile, the gap between the rhetoric of “equitable voting power” and the actual reality widens.
Three Scenarios for 2025
Looking ahead to the October meetings, three potential scenarios come into play:
1. **Worst-case:** The US obstructs any substantive changes, other G7 allies align, and even symbolic reforms—such as raising the “basic votes” for smaller nations—stall. This would echo the IMF’s 2023 quota review, which essentially achieved nothing.
2. **Modest reform:** To avoid another failure, shareholders may agree on a limited increase in basic votes for low-income members and a general proportional capital increase. While more symbolic than substantial, it could be presented as progress.
3. **Best case:** Shareholders could establish a new institutional design that includes “misalignment limits” (i.e., no country’s voting share should deviate more than 20% from its calculated shareholding) alongside a commitment to “responsible shareholding,” requiring major shareholders (including China) to contribute regularly to the Bank’s concessional arm (IDA). This scenario would necessitate a significant compromise between Washington and Beijing, with China agreeing to increased financial obligations in exchange for greater voting rights.
The Stakes
If the Bank fails to deliver once more, the repercussions will extend beyond its internal governance. The institution risks further diminishing its legitimacy as the world’s leading multilateral development bank. With pressing global challenges—including debt distress, fragile states, climate change, and cross-border conflicts—demanding coordinated action, a failure to address the Bank’s stagnation could push emerging powers to redirect resources to alternative institutions.
The irony is that reform would not only benefit China, India, and other underrepresented economies, but also serve the interests of traditional shareholders. A governance structure that accurately reflects today’s multipolar economy would bolster the Bank’s credibility and relevance. Conversely, obstructing reform to maintain Western control may yield short-term influence but jeopardize the institution in the long run.
Conclusion
The upcoming Annual Meetings from October 13 to 18 could represent yet another missed opportunity or a pivotal moment for change. For the World Bank to maintain its status as a genuinely multilateral institution, it must break free from the structural constraints and geopolitical obstructions that have hampered reform.
The alternative presents a bleak scenario: a governance system that increasingly misaligns with the world it claims to represent, rendering the Bank’s assertions of global leadership increasingly hollow.
