Sunday April 26, 08:28 PM
IMF, World Bank focus on crisis aid for poor countries
By Bryan McManus
WASHINGTON (AFP) - The International Monetary Fund and World Bank met Sunday, aiming to get more help to developing countries battered by the global financial crisis that is pushing millions more into poverty.
Topping the agenda of a meeting of the joint IMF-World Bank development committee was the fallout from the crisis that began in the advanced economies but which is now hitting the most vulnerable countries.
A World Bank/IMF report warned on Friday that the crisis means up to 90 million more people will remain trapped in extreme poverty this year while the chronically hungry could top one billion.
"The international community needs to work together to prevent the current crisis from escalating into a development crisis," Chinese Vice Finance Minister Li Yong said.
African countries are among the most vulnerable in a crisis which has slashed investment and credit flows, jeopardizing development gains, especially on poverty reduction.
The International Monetary Fund forecasts growth in Africa to plunge to 2.00 percent in 2009 from 5.25 percent in 2008 as exports slump and investment flows shrink.
The head of the African Development Bank, Donald Kaberuka, warned on Sunday that Africa was hit more quickly than expected by the crisis and, just as bad, would pick up more slowly when recovery eventually comes.
Most expected problems after about 18 months because Africa was not tightly integrated into the global financial system but instead the crisis had had an immediate impact on investment while "credit flows had almost dried up."
"My concern (is that) once recovery sets in ... African countries will recover much more slowly," Kaberuka said.
On Saturday, the World Bank launched a 55-billion-dollar infrastructure investment program designed specifically to help developing countries weather the worst global slump in decades.
"As developing countries are facing the trials of the global economic crisis, it is vitally important that economic stimulus packages in the developed world are accompanied by support to those that cannot afford multi-billion (dollar) bailouts," World Bank president Robet Zoellick said.
"A top priority must also be support for the poorest countries," US Treasury Secretary Timothy Geithner told the IMF/World Bank Development Committee on Sunday.
He said Washington was "on track" to meet a pledge to double development aid to Sub-Saharan Africa by next year and would increase other help "to vulnerable populations ... so that we can give people the tools they need to lift themselves out of poverty."
Brazil told the IMF/World Bank development committee meeting that a temporary increase in World Bank aid to such countries "cannot be an option" and attacked the idea free-market capitalism was the only answer to the problems.
"We need to free the world (of) pervasive economic dogmas presented for many years as absolute truths," Brazilian Finance Minister Guido Mantega said in a statement.
Steps to limit downturns "must not be adopted only when a crisis is under way. Applied in advance by all ... they could be an effective protection against future crisis," he said.
The 185-member IMF and sister institution the World Bank were meeting for a second and final day Sunday under tight security at their headquarters just blocks from the White House in Washington.
The IMF earlier this week sharply downgraded growth forecasts, saying it now sees the global economy contracting by 1.3 percent this year before returning to growth of 1.9 percent in 2010.
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