BASSETERRE, St. Kitts – POOR and developing countries are growing increasingly susceptible to multiple waves of economic stress and, according to World Bank Group President Robert Zoellick, they will continue to be “hit hard”.
In an address made on Thursday, June 11, the World Bank official explained that although growth is expected to revive during the course of 2010, the pace of the recovery is uncertain and the poor in many developing countries would continue to be “buffeted by the aftershocks”.
“Waves of economic pain continue to hurt the developing world’s poor, who have less cushion to protect themselves. There is much more we need to do in the coming months to mobilise resources to ensure that the poor do not pay for a crisis that is not of their making,” Zoellick said.
According to the latest World Bank estimates, the global economy would experience a decline of about three percent; a significant revision from a previous estimate of 1.7 percent.
And, unless the slump in exports, remittances and foreign direct investment is reversed by the end of 2010, poor and developing countries stand the chance of countering all the progress achieved in poverty reduction.
To avoid this unpromising outlook to be actualised, Zoellick stated that the recovery needs to encourage private business and financing as there is not enough public sector money to solve the global crisis.
“Low-income countries that have limited borrowing capacity due to low reserves and drained national budgets will face particular difficulties in getting sufficient finance in the next few years. Because of this, lending from the World Bank, the International Monetary Fund (IMF) and other sources will become increasingly important as the crisis rolls across low-income countries,” said Zoellick.
The World Bank official said crisis implications for poor countries are “stark”, adding that they have driven expanded use of the Bank’s resources. He informed that there has been a marked increase in the requests for assistance at the International Development Association (IDA), part of the World Bank Group that focuses on the 78 poorest countries.
Zoellick further stated that demand has also grown rapidly at the International Bank for Reconstruction and Development (IBRD), the part of the World Bank Group that supports creditworthy low and middle-income countries.
It is important, according to Zoellick, that the G8 meetings this month and in July follow-up on the promises made at the Group of 20 meeting in London in April to restore domestic lending and the international flow of capital.
