World Bank Pledges $130 Billion For Poor Countries
World Bank pledges up to $130 billion for poor countries in financial crisis
12 November 2008 – The World Bank Group is to substantially increase support for developing countries by as much as $130 billion over the next three years to help them weather the spreading global financial crisis.
“Leaders meeting on Saturday to discuss the global financial crisis must not lose sight of the human crisis,” World Bank Group President Robert B. Zoellick said, referring to this coming Saturday’s Washington summit of G-20 countries, grouping the major industrial states and leading developing nations. “As always, it is the poorest and most vulnerable who are the hardest hit,” he added.
The Bank said its International Bank for Reconstruction and Development could make new commitments of up to $100 billion over the next three years. This year, lending could almost triple to more than $35 billion compared to $13.5 billion in 2007. Plans include the launch or expansion of four facilities for the crisis-hit private sector that is critical to employment, recovery and growth.
In addition to helping cash-strapped governments, the Bank is ramping up support to the private sector through the launch or expansion of four initiatives by the International Finance Corporation (IFC), its private sector arm. Combining IFC funds and money mobilized from various sources including governments and other institutions, these facilities are expected to total around $30 billion over the next three years.
The Bank has lowered its growth forecast for developing country economies to 4.5 per cent for 2009, compared to a previous projection of 6.4 per cent, due to a combination of financial turmoil, slower exports and weaker commodity prices. It expects high income country economies to contract by 0.1 per cent next year while the world economy ekes out only 1 per cent growth.
“The response to this crisis must be global, coordinated, flexible and fast,” Mr. Zoellick said. “While the challenges need to be addressed at the country level, it is more critical than ever that the international community acts in a coordinated and supportive way to make each country’s task easier.”
Sharply tighter credit conditions and weaker growth are likely to cut into government revenues and their ability to invest to meet education, health and gender goals, as well as the infrastructure expenditures needed to sustain growth. Current estimates suggest that a 1 per cent decline in developing country growth rates pushes an additional 20 million people into poverty. Already 100 million people have been driven into poverty as a result of high food and fuel prices.
Aside from expanded lending, the Bank is working to speed up grants and long-term, interest-free loans to the world’s 78 poorest countries, 39 of which are in Africa. Donors last year pledged $42 billion for the International Development Association, the World Bank’s fund for these countries.