World Bank, IMF trying to pull world economy out of mire, financial crisis turning into human, development crises

World Bank, IMF pooling wisdom in bid to pull world economy out of mire

 2009-04-25 19:39:48  

    By Xinhua writers Wang Jiangang, Bai Jie and Zhang Yadong

    WASHINGTON, April 25 (Xinhua) --

Two major world financial institutions -- the World Bank and the International Monetary Fund (IMF) -- are trying their best to pull the global economy out of its nosedive by pooling their wisdom and strength.

    The spring meetings of the two institutions open Saturday in the capital of the United States, where the current global economic crisis originated.

    High-ranking financial officials, noted experts and scholars from across the world have arrived in Washington, all hoping to find the best possible ways to stop or at least slow down the pace of the economic downturn.

    WORRYING GLOBAL FINANCIAL CRISIS

    The world economy has been struggling for months with continuous bleak data, which have finally made people realize that the decline is worse than previously thought.

    An IMF-World Bank report released Friday warned that the global financial crisis, the most severe since the Great Depression of the 1930s, is "rapidly turning into a human and development crisis."

    The crisis originated in the developed world, but it has spread quickly and inexorably to the developing world, sparing no countries, according to the Global Monitoring Report 2009: A Development Emergency.

    The crisis is imperiling attainment of the Millennium Development Goals (MDGs) and creating an emergency for development as the poor countries are especially vulnerable, for they "lack the resources to respond with ameliorative actions," the report said.

    Sub-Saharan Africa, which has been growing briskly for years, has been seriously affected by the global crisis, Antoinette Monsio Sayeh, director of the IMF's African Department, told a press conference Friday at the IMF headquarters.

    The global crisis is also pushing some 35 million people back into poverty and vulnerability in Europe and Central Asia, according to a news briefing Friday on Europe and Central Asia Economic Update, chaired by Shigeo Katsu, vice president of the World Bank.

    The world economy will contract in 2009 for the first time since World War II, with every major country suffering a deep recession, the International Monetary Fund said Wednesday.

    Presenting the IMF's latest bleak assessment in Washington, its economic counselor, Olivier Blanchard, said that without the radical policy measures taken since investment bank Lehman Brothers collapsed in September, the world economy would now be "in the middle of something very close to a depression."

    "Things are not great, but they could have been extremely bad," he said.

    China's economy, which has been growing rapidly over the past 30 years, has slowed its pace as a result of the global crisis.

    IMF Managing Director Dominique Strauss-Kahn admitted that the global crisis "is far from over."

    GLOBAL CONSENSUS

    In a recent address to a conference at Johns Hopkins University's School of Advanced International Studies, Strauss-Kahn warned that the "forces pushing down economic conditions are stronger than those pushing in the other direction."

    As a result, 2009 will be a "horrible year," he said.

    In the face of the deteriorating economic situation, many have already realized that in a world which is so closely interdependent, no single country is able to reverse the downward trend without coordinating efforts with others.

    The ministers of the Intergovernmental Group of Twenty-Four International Monetary Affairs and Development (G24) seem to know the "secret."

    In a statement issued Friday, ministers attending the 81st meeting of the G24 noted that the global crisis requires "global solutions with the participation of all countries."

    The ministers stressed that the global financial and economic crisis that originated in mature markets "was continuing to have a disproportionate effect on developing countries through various channels, including falling prices of primary commodities, sharply contracting exports, declining remittances, negative net private capital flows, and a credit crunch affecting many countries."

    The ministers welcomed the commitment made at the G20 meeting to implement the needed measures to stimulate demand and restore confidence in the financial system, and to address the deep-seated weaknesses in the regulation of national and international financial markets. They also called for concerted and swift implementation of these commitments.

    U.S. Treasury Secretary Timothy Geithner echoed the view, saying that countries need to "pull together to lay the groundwork for a new, more stable and more sustainable pattern of growth in the future."

    Geithner told the Economic Club in Washington: "All nations may not be in the same boat, but they're facing the same storm."

    And the World Bank and the IMF will undoubtedly be the focus of attention this weekend as professionals put their heads together to look for the best way out of the world economic dilemma.

    Many people, in the meantime, are pleased to know that the World Bank and the IMF are trying to take steps to reverse the current economic tide.

    The World Bank will increase its infrastructure investment to 45 billion U.S. dollars over the next three years to provide the foundation for rapid recovery, World Bank President Robert Zoellick said Thursday.

    "Investments in infrastructure can provide the platform for job creation, sustainable economic growth, overcome poverty, and help jump- start a recovery from the crisis," Zoellick said.

    GLIMMERS OF HOPE

    Although the world economic outlook is bleak, glimmers of hope are on the horizon. Quite a few positive steps are being implemented -- many countries, financial institutions and parties concerned are scaling up to cope with the emergency.

    To fill the growing financing gaps in developing countries, G20 leaders agreed on April 2 to support a tripling of resources for the IMF to 750 billion dollars.

    They also supported an equivalent to 250 billion dollars in allocation to the Special Drawing Right, the international reserve asset created by the IMF to supplement the existing official reserves of member countries, of which 100 billion dollars will go directly to developing countries. The IMF's concessional lending capacity for poor countries will be doubled.

    The G20 supported an increase of 100 billion dollars in multilateral development bank lending to a total of 300 billion dollars over the next three years. It will support the World Bank's Vulnerability Framework, which funds infrastructure projects, safety nets programs and financing for small and medium enterprises.

    China is contributing a lot to helping the world economy get back on its feet although it is still a developing country with a large poor population.

    World leaders at the G20 summit in London on April 2 took only four-and-a-half hours to decide on devoting about 1 trillion dollars to support world economic growth and trade, an outcome that surprised many analysts with its scale.

    China said it would contribute 40 billion dollars to the IMF to increase its financing capacity.

    Many agree that China is setting a good example by playing its part in the worldwide economic recovery drive. However, the economy cannot be extricated from the mire without the concerted efforts of all countries, rich and poor.

World Bank, IMF: Financial crisis turning into human, development crisis

2009-04-24 23:47:17  

    WASHINGTON, April 24 (Xinhua) --

The global financial crisis, the most severe since the Great Depression in 1930s, is rapidly turning into a human and development crisis, warned an IMF-World Bank report released Friday.

    The crisis originated in the developed world, but it has spread quickly and inexorably to the developing world, sparing no countries, said the Global Monitoring Report 2009: A Development Emergency (GMR).

    The crisis is imperiling attainment of the 2015 Millennium Development Goals (MDGs) and creating an emergency for development as the poor countries are especially vulnerable for they "lack the resources to respond with ameliorative actions."

    Most of the eight globally agreed goals are unlikely to be met, including those related to hunger, child and maternal mortality, education, and progress in combating HIV/AIDS, malaria and other major diseases, the report warned.

    It also noted that, although the first goal of halving extreme poverty by 2015 from its 1990 level is still reachable based on current projections, risks abound.

    New estimates show that more than half of all developing countries could experience a rise in the number of extreme poor in2009.

    This proportion is likely to be still higher among low-income countries and countries in Sub-Saharan Africa-two-thirds and three-quarters, respectively.

    It is estimated that an additional 55 to 90 million people will be trapped in extreme poverty in 2009 due to the worldwide recession.

    The number of chronically hungry people is expected to climb to over 1 billion this year, reversing gains in fighting malnutrition and making the need to invest in agriculture especially urgent.

    "With simultaneous recessions striking all major regions, the likelihood of painfully slow recoveries in many countries is very real, making the fight against poverty more challenging and more urgent," said John Lipsky, IMF Deputy Managing Director.

    The crisis will affect all developing countries over the next two years, through contracting export volumes, lower prices, slowing domestic demand, declining remittances and foreign investment, reduced access to financing, and shrinking revenues.

    "For poor countries, this is a crisis upon crisis. It comes on the heels of the food and fuel crisis," said the report. "The triple jeopardy of the food, fuel, and financial crisis is pushing many poor countries into a danger zone, imposing rising human costs and imperiling development prospects."

    Developing world growth is projected to fall to 1.6 percent in 2009, from an average of 8.1 percent in 2006-07, according to new IMF projections. Global output, meanwhile, is projected to contract by 1.3 percent this year.

    "Worldwide, we have an enormous loss of wealth and financial stability," said Justin Yifu Lin, World Bank Chief Economist. "Millions more people will lose their jobs in 2009, and urgent funding must be provided for social safety nets, infrastructure, and small businesses in poor countries, for a sustainable recovery."

    The GMR cautions that, while the crisis calls for a special focus on social protection programs and services that shield poor and vulnerable people from immediate hardship, it is also vital to speed up progress toward the human development goals, particularly those related to health where prospects are gravest.

    "The crisis calls for a reaffirmation of the world's commitment to the promise of the MDGs and it gives added urgency to reinforcing key programs in health and education, such as control of major diseases including HIV/AIDS and malaria, health systems strengthening, and the Fast Track Initiative in education," said Zia Qureshi, lead author of the report and World Bank advisor.

Editor: Yan