ISTANBUL - The estimated external financing needs for this year and next year will only be met with a substantial scaling up of donor support for low income countries, as these countries have been hit hard by the global economic crisis, the President of the World Bank, Robert Zoellick has said.
“These are difficult times for governments as their budgets are stretched. We need to move beyond words on paper and start putting seeds in the ground and fertilizers in farmer’s hands,” the Bank’s chief, told a press briefing on Friday in Istanbul ahead of the Bank’s Annual meetings of Board of Governors.
Low income countries’ financial needs in 2009-10 are estimated to increase by around $25 billion a year on average, relative to pre-crisis levels according to the International Monetary Fund (IMF).
Mentioning that the crisis has led to a sharp contraction in export growth, Foreign Direct Investments inflows, remittances on these countries, Zoellick said the Bank’s Annual meetings offer a platform to follow up on the proposal for a crisis facility for low-income countries to ensure that protection for the most vulnerable becomes a permanent part of the world’s financial architecture.
“The G-20 summit last week provided clear markers for the work of the World Bank. But more than 160 countries were not at the G-20 table,” he said. “
These meetings can therefore ensure that the voices of the poorest are heard and recognized. This is the G-186,” Zoellick added.
Zoellick also said the Bank is following up with UN agencies and other partners on the G-20 request to put into operation the food security initiative launched at the G-8 meetings in L’Aquila, Italy earlier this year.
That initiative calls for the injection of an additional $20 billion in financing for agricultural development.
He said the Development Committee of the Bank will also be discussing voting reform during their deliberations next week, following the G-20 recommendation to increase developing country voting shares by at least 3 percent to at least 47 percent by early 2010.
“I have called for increasing the developing countries’ share in the World Bank over time to 50 percent,” he added.
According to the Development Committee, already under severe strain, low income countries face increasingly “grave” economic prospects if the dramatic economic and financial deterioration is not reversed soon.
Net private capital flows to the poor countries have declined significantly to $21 billion in 2008 from $30 billion in 2007 and are projected to drop further to $13 billion in 2009.
The global recession has also put at risk $11.6 billion of core spending in areas such as education, health, infrastructure and social protection in the most vulnerable countries.
As a result of the crisis 89 million more people will be living in extreme poverty, on less than $1.25 a day, by the end of 2010.
The World Bank says , the current crisis and the resulting shrinkage in private capital flows is creating a large gap in external financing needs for developing countries estimated between $350billion and $635 billion for 2009 alone and is expected to continue into 2010 and beyond .