May 4 (Bloomberg) -- Asian ministers will come under pressure this weekend to say whether they support World Bank President Paul Wolfowitz, who is fighting to keep his job amid complaints he gave his companion an unusually large pay rise.

Finance ministers from Japan, China, and other Asian nations, which control a quarter of the votes on the World Bank board, will meet May 4 to 7 in Kyoto for the annual meeting of the Asian Development Bank. European governments have rebuked Wolfowitz, while Asian and African nations have been reluctant to publicly take sides.

``It would be helpful if the Asians would be more forthcoming,'' said Colin Bradford, a senior fellow at the Brookings Institution in Washington who specializes in multilateral agencies. ``Like a lot of other people in this game, they are playing for time.''

The World Bank's 24-member board will next week consider the findings of a panel that's been probing Wolfowitz's role in the promotion awarded to Riza Shaha, whom he dated. He has received public support from only one major country -- the U.S., which nominated him for the post. Most are waiting for the report before declaring their position.

Japan is the second-largest shareholder in the World Bank, with 7.9 percent. China holds 2.8 percent. The U.S. is the biggest, with a 16.4 percent stake.

No Impact

``The Wolfowitz issue is being dealt with by the World Bank board, and we must wait until the board concludes and makes it public what they see regarding the issue,'' ADB President Haruhiko Kuroda told a news conference in Kyoto today. ``We don't see this having any effect on our operations in Asia.''

The spat over Wolfowitz comes as other multilateral institutions including the ADB struggle to maintain their relevance in a world where poverty is declining in traditional recipient countries. The International Monetary Fund is changing its role as the accumulation of foreign reserves helps reduce volatility in global currency markets.

``Strong growth and macroeconomic stability have led to impressive declines in poverty,'' the Manila-based lender said in a March report commissioned by Kuroda to explore ways to restructure itself. ``ADB must change radically.''

The number of people in Asia living on less than $1 a day almost halved to 19 percent in 2003 from 1990, said the report, the recommendations of which are to be discussed at this weekend's meeting in Kyoto.

`New ADB'

The ``new ADB'' must bring together lenders and borrowers from the region to foster infrastructure development and promote higher growth, the report said.

Asia already has enough money of its own to meet those needs. Excluding Japan, the region has excess savings over investment of about 4 percent of gross domestic product. That's resulted in the accumulation of foreign-exchange reserves of more than $3 trillion.

The report says the ADB could play a greater role in directing Asia's wealth. The agency's annual lending in 2006 was $7.4 billion, less than 4 percent of the $228 billion that it estimates is needed in annual infrastructure investment in the region by 2010.

A number of other proposals have been mooted for overcoming this financing gap.

Countries in the region should consider setting up an Asian Investment Bank, similar to the European Investment Bank, that could lend substantially more than the ADB, according to the United Nations Economic and Social Commission for Asia and the Pacific. The investment bank would be controlled by Asian governments and could specialize in infrastructure financing, the UN arm said last year.

Investment Climate

``The difficulty is to transform the potential need for better infrastructure into bankable projects,'' said ADB's Kuroda. ``It will involve better investment climate, governance, rule of law in member countries. Unless this is addressed, it does not make sense to establish another institution.''

Thailand in 2003 proposed the idea of an Asian fund to help direct the region's surplus cash to areas such as infrastructure to spur economic growth.

``Everybody agreed it was a good idea because the bond market will allocate capital more efficiently,'' said Michael Preiss, an associate director at HSBC Holdings Inc.'s investment advisory group in Dubai. ``It did not take off because of distrust among nations. The Chinese and Japanese could not agree on this.''

China's Plan

China wants to set up an investment agency on its own to boost infrastructure investment in the region, said He Fan, assistant director of the government-backed Institute of World Economics and Politics in Beijing. Japan traditionally appoints the president of the ADB, established 40 years ago.

``The agency will be different from the function of the ADB,'' He said. ``The proposed agency may focus on different areas in need of investment and seek to boost public-private- partnership projects.''

China is also concerned about the U.S. government's push to enhance the currency-surveillance role of the IMF, set up in Bretton Woods in 1944 at the same time as the World Bank.

The World Bank, which is trying to counter criticism over its bureaucracy and anti-graft drive, may ultimately benefit from the controversy surrounding Wolfowitz's decision to promote his companion, some officials said.

A former U.S. deputy defense secretary, Wolfowitz, 63, has ruffled feathers at the Washington-based bank since his appointment in June 2005. President George W. Bush is the only world leader to publicly say he should stay.

Loans Suspended

Wolfowitz suspended loans to Kenya, India and Bangladesh in his drive to ensure aid money didn't disappear into the pockets of corrupt politicians and contractors. Detractors said the campaign had gone too far and had distracted the bank from its primary mission of fighting poverty. Last year, the U.K. briefly withheld about $94 million from the World Bank, saying too many conditions had been attached to its lending.

``The effectiveness of the bank will be strengthened as a result of the investigation,'' said Salman Shah, who heads Pakistan's finance ministry. ``As the investigation unfolds, the system will be streamlined.''

To contact the reporter on this story: Cherian Thomas in Kyoto at cthomas1@bloomberg.net

Last Updated: May 4, 2007 00:15 EDT