THE global financial crisis could become “a human and development calamity” for many poor countries, according to the World Bank, which urged donor nations to speed delivery of money they have pledged and consider giving more.
Developing countries, its main constituency, face “especially serious consequences with the crisis driving more than 50 million people into extreme poverty, particularly women and children,” the bank said.
Bank president Robert Zoellick said some of the poorest economies are being hit by “second and third waves of the crisis”. He said no one knows when recovery will begin.
“There is a widespread recognition that the world faces an unprecedented economic crisis, poor people could suffer the most and that we must continue to act in real time to prevent a human catastrophe,” Zoellick said. The bank will respond by tapping its healthy balance sheet to increase lending up to $100 billion over three years and launch initiatives in social protection, public works and agriculture, he said.
Zoellick spoke at a news conference that wrapped up weekend meetings of the World Bank and its sister institution, the International Monetary Fund, aimed at determining what additional action is needed to counteract the worst financial crisis in decades.
The weekend kicked off with a meeting of finance ministers of the Group of Seven major industrialised nations that expanded into a meeting of the Group of 20 nations, bringing in such rising economic powerhouses as Brazil, India and China. There was general agreement at the meetings that voting shares of those nations in the IMF and World Bank should be increased to reflect the changed global economic situation. Ministers pledged to examine ways to do that.
While they met, small groups of protesters demonstrated near the headquarters of the two organisations, three blocks from the White House. They chanted “IMF, tear it down. World Bank, tear it down”.
Ministers attending the IMF-World Bank meetings said they saw signs that the world economy was stabilising, but it would take until mid-2010 for the world to emerge from the worst recession in decades. They said stimulus packages, bank recapitalisation and other actions taken by governments and central banks to deal with the crisis are beginning to show results.
“Carefully, cautiously, we can say that there is a break in the clouds,” Egyptian finance minister Youssef Boutros-Ghali, chairman of the IMF’s International Monetary and Financial Committee, said. He added that some financial markets are trending up and other economic indicators are improving, “but there are still downside risks”.
The finance ministers tried to work out details of the $1.1 trillion plan that US President Barack Obama and his G20 counterparts announced at their recent summit in London. There was much talk about how to come up with the fresh $500 billion infusion that the G20 pledged to the IMF at the summit. More than $300bn is already pledged by the US, the European Union, Japan, Canada, Switzerland and Norway.
© Irish Examiner Ltd. All rights reserved