World Bank president Robert Zoellick and IMF managing director Dominique Strauss-Kahn yesterday made another appeal for the humanitarian crisis in the least developed countries not to be forgotten.
More than 100 million people have already been driven into poverty as a consequence of the fuel and food price shock around the globe, Zoellick said. “Aid flows must be maintained.”
He referred to the UN’s Millennium development goals, which are intended to cut poverty by half by 2015, after the meeting of the Development Committee, a joint committee on the transfer of real resources to developing countries by the World Bank and the IMF.
“We should not forget other crises,” said Strauss-Kahn. Zoellick added that there was a “risk of distraction” regarding important issues, such as climate change.
Zoellick referred to the current global financial crisis as “a man made catastrophe” and said that the World Bank has “the financial capacity comfortably to double its annual lending to developing countries to meet additional demands”. Some $13.5 billion were loaned by the institution last year.
“We can go even further,” he told a press conference. He added that the International Finance Corporation, the private lending arm of the World Bank, had enough funds to capitalize small banks that might be impacted by the global financial crisis. “We need to be ahead of the curve for some of the small banks that may be in need of capitalization,” said Zoellick.
The IMF chief mentioned that a “growing number of countries” were calling the Fund for assistance, and that progress was being made to set up “a new liquidity facility”.
“The Fund has $200 billion dollars [to help], the Fund has the instrument to do that. We have just revamped our exogenous shock facility. We are in the process of building a new liquidity facility to be able to fit more precisely and more rapidly the need of our membership,” said Strauss-Kahn.
Agustin Carstens, chairman of the development committee and Mexican finance minister, said: “The poorest and most vulnerable groups risk the most serious, and in some cases permanent damage”, adding that $850 million had already been “approved or in the pipeline” as part of a $1.2 billion “rapid financing facility” launched by the World Bank group. “We urge countries to consider making contributions to this fund,” he said.
A development committee statement said: “Developing and transition countries could suffer serious consequences from any prolonged tightening of credit or sustained global slowdown.”
The committee also supported progress towards “a substantial realignment of bank shareholding as part of comprehensive reform”.