On the eve of the IMF/World Bank Spring
Meetings here in Washington, the financial institutions released two new
reports Friday. The first is the Global Monitoring Report, which says the 2015
Millennium Developments Goals may not be met because of the global financial
crisis. It warns the crisis is creating what it calls a development emergency.
Bank Senior Advisor John Lipsky, lead author of the Global Monitoring Report,
says developing nations, in general, are facing serious problems as a result of
the global financial crisis.
though the recession is being felt most strongly so far in the advanced
economies…unfortunately conditions in developing are deteriorating
dramatically. And the situation is extremely serious. For this year, we do not
expect more than about one and a half percent growth overall in emerging and
developing countries taken as a group," he says.
many countries, as a result, disposable income will fall. "With simultaneous
recessions striking all major regions, the likelihood of a painfully slow
recovery in many countries is very real. And this will make the fight against
poverty more challenging and even more urgent," says Lipsky.
World Bank official says all developing countries are feeling a "sharp
contraction" in world trade. "Overall, the volume of developing country exports
is projected to fall by about six and a half percent in 2009. This is an
exceptionally strong decline compared with past crises," he says.
for commodities, he says, "commodity exporters, especially low income
countries, are also feeling the effects of lower demand and weak export prices
for their products. In several countries, mines have been closed because world
market prices for commodities have declined below production costs and this is
contributing importantly to rising unemployment."
also been a sharp drop in private capital flows to developing and emerging
economies. Government borrowers and private corporations are facing financing
problems, according to the report. "Liquidity and solvency problems have forced
many banks in advanced economies to reduce international lending," he says.
World Bank/IMF report says remittances will drop sharply this year "as
countries in Europe, Central Asia and Latin America are going to be hard hit."
calls for "forceful and urgent action…to cleanse balance sheets and
recapitalize banks and improve coordination among the affected economies."
says that countries should take steps to protect the poor, adding, "bilateral
donors must follow up on their commitments to increase aid to low income
countries. Current aid levels still fall well short of the G8 commitments made
at Gleneagles (Scotland) in 2005. And in particular, the commitment to double
aid to sub-Saharan Africa by 2010, frankly, is simply unlikely to be met."
response, the IMF says it is increasing assistance to low income countries. For
example, concessional lending is expected to triple over the next two years.
Such loans to very poor countries are usually long-term with very low or zero
percent interest rates.
second IMF report released Friday is the Sub-Saharan Africa Economic Outlook.
Antoinette Sayeh, the IMF's African Department director, says, "We see the
prospects for Africa significantly worse than they looked six months ago…but
the crisis is now in full force in Africa as a result, of course, of the
significant slowdown in demand in the rest of the world -- the huge decline in
demand for African exports. Demands for those exports have weakened and the
prices for most commodity exports have fallen."
Sayeh also cities tighter credit and
lower willingness to invest in developing countries during the economic crisis.