WASHINGTON, US - THE heads of the World Bank and International Monetary Fund on Sunday assured developing countries that their needs would not be forgotten in efforts to tackle the financial crisis.
Picking up on complaints that the crisis will put recent hard-won economic gains in the developing world at risk, World Bank head Robert Zoellick insisted that this would not be allowed to happen.
'Developing countries ... risk very serious setbacks to their efforts to improve the lives of their populations from any prolonged tightening of credit or a sustained global slowdown,' Mr Zoellick told a news conference.
'We must ... ensure that as governments and publics turn their attention to problems close to home, they do not step back from their commitments to boost overseas assistance to meet the Millennium Development Goals,' he said.
IMF head Dominique Strauss-Kahn said 'the financial crisis adds a crisis to a crisis (of rising food and energy prices in poor countries). 'We should not forget this other crisis,' he told the news conference after a meeting of the World Bank and IMF's Development Committee which advises the two bodies on economic development issues.
Earlier, several developing country representatives told the committee they faced serious additional challenges if their concerns and needs were downgraded or forgotten as the rich nations focussed on their own problems.
The poorer countries could be hit twice by the crisis - finding it more difficult to get access to funding and as their exports fall as the crisis undercuts demand, Indian Finance Minister P. Chidambaram said.
'The developing countries will suffer for no fault of theirs. They did not cause the contagion. Many are not well-equipped to face the consequences,' Mr Chidambaram told the committee during the IMF and World Bank annual meetings in Washington.
The plight of the weakest has been 'largely forgotten,' Sierra Leone Finance Minister David Carew told a separate news conference on Highly Indebted Poor Countries.
'We expect to see a reduction of inflows to Africa and that is of concern to us,' Mr Carew said, citing likely falls in remittances, foreign exchange reserves and foreign investment as the crisis bites deeper.
Worse still, the banking system in poorer countries could face volatility because of links with banks in the developed world which have been pushed to the brink by the crisis destroying their capital.
'Africa does not have (the) capacity for intervention' to help its banks that the developed world does, Mr Carew said, adding: 'The ripple effect of the crisis is coming ... likely later this year.'
Mr Zoellick significantly told the news conference that the International Finance Corp, the private sector lending arm of the IMF, was exploring the possibility of a fund to help recapitalise banks in the developing world.
With donor aid programmes under pressure due to the financial crisis, the World Bank estimates that up to 100 hundred million people are at risk of falling into poverty because of higher food and energy prices.
'The large surge in food and energy prices - and an associated rise in inflation - present major policy challenges for most countries, further compounded by the uncertain global conditions as the financial crisis unfolds,' an update for the Development Committee said.
For his part, Mr Zoellick stressed that 'aid flows must be maintained,' adding that 'today's meeting of ministers was unanimous in that regard'.
The 185-member IMF and especially the World Bank are tasked with aiding development and their annual meetings normally devote much time to reviewing progress made and new programmes.
This year, however, they have been overshadowed by the financial crisis, with a major summit of eurozone leaders in Paris on Sunday to follow up a Group of Seven industrialised nations gathering in Washington on Friday.
The G7 - the United States, Britain, Canada, France, Germany, Italy and Japan - said they would use all means available to combat the crisis, having already spent hundreds of billions of dollars to support their banks and financial systems.
The charity Oxfam was very critical of the IMF and World Bank meetings which 'offered shamefully few new solutions to the world's poorest countries.
'World leaders acknowledged there is a global poverty crisis but they've failed to address it,' Oxfam said in a statement.
'We needed to see real action for poor countries ... Instead developing countries' problems were sidelined ... It is still not clear how poor countries will be helped to deal with the credit crunch.' -- AFP
