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World Bank /IMF Report says Global Economic Crisis Takes Long-Term Toll on Development

  • Joe DeCapua

A new report says, “The global economic crisis has “slowed the pace of poverty reduction in developing countries – and is hampering progress toward other Millennium Development Goals.”

The World Bank and International Monetary Fund Friday released their Global Monitoring Report 2010.

World Bank Lead Economist and report author Delfin Go, says, “The main point…is that although the recovery is underway there will be lasting and permanent impacts on development prospects and outcomes for years to come.”

He says the global economic crisis slowed much of the development-related gains that had been made.

“Prior to the crisis, a lot of progress was being made on some of these… Millennium Development Goals. As a result of the crisis, there will be persistent gaps and some of the poverty numbers will be slowing down. So the reduction of poverty will not be as much as before,” he says.

Go also expects to see delayed progress in child education completion rates, as well as child and maternal mortality rates.

A bright spot

The report says 53 million more people will remain in “extreme poverty by 2015,” when the MDGs are due to be reached. Nevertheless, there is a bright spot in the findings. The report says despite the economic crisis, “the number of extreme poor could total around 920 million five years from now, marking a significant decline from the 1.8 billion people living in extreme poverty in 1990.”


Based on this projection, the World Bank and IMF say it’s still possible for the developing world to achieve at least one MDG – that of halving extreme poverty – from its 1990 level.

In a statement, the financial institutions say the IMF “provided the resources and policy advice to help prevent the crisis from spinning out of control,” while the World bank group and others “sought to protect core development programs and strengthen the private sector.”

OXFAM

Elizabeth Stuart, spokesperson for the International aid agency OXFAM, is reacting to the Global Monitoring Report, calling the findings “shocking news.”

She adds, “It’s a very, very clear statement from the World Bank and the IMF that the effects of the global economic crisis really aren’t over in developing countries.”

Stuart says rich nations are seeing signs of recovery, but “for developing countries, “the worst is yet to come for this crisis.”

Recent OXFAM research finds developing nations are being forced to cut “vital spending” on health care, education and agriculture.

“This means that the poorest people in the poorest countries are going to be feeling the impact of this crisis more and more and more. And remember that this is a crisis that they had nothing to do with. This was caused by the rich world’s bankers,” she says.

Reacting to the long-term projected declline in “extreme poor,” Stuart says, “It does seem to have that silver lining. I think what’s very clear is that all sub-Saharan African countries are going to miss the Millennium Development Goals. We’re just five years away from the deadline.”

The OXFAM spokesperson says, “Just at the time when (developing countries) should be really increasing spending on things like health and education, so they can hire teachers and doctors and nurses, they’re having to cut it because their revenues have been hit so hard.”

Recommendations

At the 2005 G8 summit in Gleneagles, Scotland, leaders made commitments to increase aid to Africa and other developing regions.


“We just in the last couple of weeks have the latest aid figures out and aid is actually falling. So our number one call is of course that the rich world needs to live up to its promises,” she says.

OXFAM is also calling on developing countries themselves to continue “prioritizing spending” on health and education and agriculture, despite the economic crisis. Stuart calls such spending “essential” for them to have a chance of achieving the MDGs on time.

OXFAM also says the IMF needs to change the way it does business.

“At the moment the IMF can only give loans to poor countries. These poor countries risk getting into debt again because they’re trying to deal with a crisis that was caused by rich world bankers,” she says.

Many economists and groups, like OXFAM, have long called for changes in the IMF, saying its structural adjustment polices created more problems than they solved and put many countries deeply in debt. They’re calling on the IMF to provide grants instead of loans.

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