WASHINGTON – The World Bank on Sunday urged donor nations to speed up delivery of the money they’ve already pledged – and open their wallets wider – to help poor countries reeling from recessions rooted in rich nations.
The economic nosedive is turning into a human and development “calamity,” which already has driven more than 50 million people into extreme poverty this year, the World Bank’s policy steering committee said in a communiqué issued at the close of its spring meeting.
“There is 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,” World Bank chief Robert Zoellick said.
Poor countries have watched as the recession has dried up investment capital, sharply reduced exports and commodity prices and slowed the flow of cash sent home by their citizens working abroad. Finance ministers at the meeting said impoverished nations need a hand up that doesn’t burden them with debt or add to the ranks of those earning just a few dollars a day.
The World Bank has pledged to provide poor countries with more than $55 billion for public works projects left in limbo when the recession hit. That follows a tripling in lending, to $12 billion, to support health, education and other safety net programs in poor countries. The International Monetary Fund is doubling the borrowing limits for 78 of the poorest countries in an effort to meet the needs of developing nations harmed by the downturn.
The economic crisis is “advancing like a silent tsunami, with those who contributed least to the crisis suffering most from its impact,” said German development minister Heidemarie Wieczorek-Zeul. She said it would take more money to help stabilize poor nations “without plunging them into a spiral of debt.”
The World Bank meeting capped three days of talks in Washington about the economic crisis, but yielded no new pledges of money from governments.
Finance ministers from the Group of Seven wealthy nations met first on Friday, followed by a gathering of the Group of 20 nations, which adds major emerging powerhouses like China, India and Brazil to the mix. The talks ended with the World Bank and IMF flexing a more muscular role in addressing and overseeing the crisis. Both Zoellick and IMF managing director Dominique Strauss-Kahn expressed support for the emerging market economies to have a stronger voice at the twin financial institutions.
Earlier this month in London, leaders from the G-20 pledged to boost support for the IMF, the World Bank and other international lending organizations by $1.1 trillion to combat the global recession. More than $300 billion has been pledged by the U.S., the European Union, Japan, Canada, Switzerland and Norway.
To make up the shortage, the IMF agreed Saturday to sell bonds – something it’s never done in its 65 years – to emerging economies. Those nations want a greater voice at the IMF before they’ll pony up additional resources. The bonds would help reach the $500 billion goal, but the notes will provide shorter-term financing than the pledges already made by other nations.
Local journalism is essential.
Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.
Subscribe to the Coronavirus newsletter
Get the day’s latest Coronavirus news delivered to your inbox by subscribing to our newsletter.