Washington — In a rare public censure, the United Nations admonished the World Bank and the International Monetary Fund (IMF) for failing to broaden participation from developing countries in their decision-making, as agreed in international forums.

In its "World Economic Situation and Prospects 2005", released Tuesday, the international body said the two sister institutions had made no progress on long-time demands to give a greater voice to developing nations in changing the quotas, capital shares and voting rights of member countries.

The U.N. echoed grievances by developing nations and independent development groups that the current system at the two powerful financial institutions does not reflect the "evolution of different economies" and fails to address "the under-representation of the developing countries in the decision-making processes."

The United Nations said that the existing formulae for representation have been shown to produce only marginal changes in representation.

In recent years, grassroots groups and some developing nations have launched a drive to give countries of the developing South more say in running the two agencies. At the Washington-based IMF and World Bank, seats and votes are allocated according to member countries' economic weight, leaving poor nations far behind heavyweights like the United States, Japan and European Union nations.

The two institutions were formed in Bretton Woods, New Hampshire at the end of the Second World War. The Bank and the Fund now each have 184 members, including developed and developing countries, and 24 board members who represent countries or groups of nations.

But while the 46 sub-Saharan African countries, for example, are represented by only two executive directors on the boards of each institution, eight rich nations, including Germany, France, Britain and the United States, are represented by their own executive directors.

Directors from rich countries now control more than 60 percent of the votes at both bodies, while the United States wields veto power over any extraordinary vote requiring a "super-majority" of 85 percent approval rate.

The Bank is the world's largest single source of development financing. It provides about 20 billion dollars a year in loans, credits and guarantees. The IMF lent 40 billion dollars in 2003.

Developing countries and civil society groups have argued that the process to choose the heads of the two institutions gives rich nations a monopoly on nominations and selections.

Traditionally, a European has led the IMF while the World Bank presidency is given to a U.S. citizen.

But officials from the two bodies and from the Group of Seven (G7) most industrialised nations have argued that the poverty reduction strategy papers -- policy documents that borrowing countries must prepare before they can qualify for loans -- already give borrowers "a voice in bank-fund assistance programmes in their countries".

Officials from the two institutions also maintain that the issue of representation is essentially a shareholders issue and that shareholders from the industrialised nations need to listen to developing nations.

Under pressure from developing nations and independent groups, a joint IMF-World Bank committee made recommendations in April 2001 on how to choose the heads of the two institutions and called for nominations from any member country.

But although the two organisations' executive boards adopted the recommendations as guidance for the future, they were never implemented.

"While the Executive Board discussions can be useful in elaborating the details of various proposals for change within existing parameters, real changes in representation can only be achieved through fundamental reform that has to come from political leaders," said the U.N. report.

The United Nations said that an international development conference in 2002 in Mexico, which issued the so-called Monterrey Consensus, had already stressed "the need to broaden and strengthen the participation of developing countries and economies in transition in international economic decision-making and norm setting". But "no progress" materialised at the two institutions.

Critics argue that the current system puts the World Bank and the IMF in a position where they are effectively accountable to no one.

The debate over legitimacy and the so-called "democracy deficit" at the Washington-based institutions was rekindled twice over the past 12 months -- first when the IMF started a search for a new managing director, and then when World Bank President James Wolfensohn said he was stepping down later this year.