- The World Bank Group has said the spreading global economic crisis is seriously threatening the achievement of the global targets to overcome poverty.
The group said today in a state that the crisis is trapping up to 53 million more people in poverty in the developing countries, with child mortality rates set to soar.
New estimates for 2009 suggest that lower economic growth rates will trap 46 million more people on less than $1.25 a day than was expected prior to the crisis, while an extra 53 million will stay trapped on less than $2 a day, the group said, adding that these new figures are over and above the 130-155 million people pushed into poverty in 2008 because of soaring food and fuel prices.
The World Bank Group said these new forecasts highlight the serious threat to the achievement of the UN’s Millennium Development Goals (MDGs), which set specific targets by 2015 to overcome poverty, saying the highlight of the new research shows that the sharply lower economic growth rates will significantly retard progress in reducing infant mortality. Preliminary estimates for 2009 to 2015 forecast that an average 200,000 to 400,000 more children a year, a total of 1.4 to 2.8 million, may die if the crisis persists.
“The global economic crisis threatens to become a human crisis in many developing countries unless they can take targeted measures to protect vulnerable people in their communities,” said World Bank Group President Robert B. Zoellick. “While much of the world is focused on bank rescues and stimulus packages, we should not forget that poor people in developing countries are far more exposed if their economies falter. This is a global crisis requiring a global solution. The needs of poor people in developing countries must be on the table,” he stressed.
In a policy note issued in the run up to the Group of Seven finance ministers meeting on Saturday, the World Bank said almost 40 percent of 107 developing countries were highly exposed to the poverty effects of the crisis and the remainder was moderately exposed, with less than 10 percent facing little risk.
The policy note, entitled “The Global Economic Crisis: Assessing Vulnerability with a Poverty Lens”, said it was critical for exposed countries to finance job creation, the delivery of essential services and infrastructure, and safety net programmes for the vulnerable.
The group however also notes that three quarters of these countries cannot raise funds domestically or internationally to finance programmes to curb the effects of the downturn, another one quarter of the exposed countries also lacked the institutional capacity to expand spending to protect vulnerable groups.
The group has urged for financial support in the form of grants and low or zero interest loans for these countries.
Mr Zoellick has recently called for the establishment of a “Vulnerability Fund” in which each developed country devoted 0.7 percent of its stimulus package to the fund. Three priority areas for the Vulnerability Fund he said would be, safety net programmes, infrastructure investments, and, support for small and medium-sized enterprises and microfinance institutions.
Meanwhile, the World Bank’s Board of Governors yesterday approved the first phase of reforms to increase the influence of developing countries within the Group, including adding a seat for Sub-Saharan Africa to allow developing countries a majority of seats on the Executive Board, and expanding voting and capital shares.
“Expanding the developing world’s voice is central to delivering effective aid and promoting shared prosperity and development within a 21st Century economic reality,” said Zoellick, who also stated that “Adding another seat for Africa, reaching developing country majority on the Board, expanding developing country shares and laying the groundwork for further reforms represent real change. I’m pleased our reform process is on track. I encourage shareholders to take action now on governmental approvals of the voting share changes, and to continue their efforts at further, more ambitious, reforms.”
These reforms were initially agreed at the World Bank Group’s Annual Meetings in October 2008. With the Governors’ approval, the amendment to the Bank’s Articles of Agreement to increase basic votes, will now move to the 185 member countries for final approval. In order to take effect the amendment must be approved by 3/5 of member countries with 85 percent of votes.
The new package creates an additional Chair at the Board for Sub-Saharan Africa, which means that developing countries can have the majority of seats on the Bank’s Board and also brings the share of developing countries in the Bank voting power to 44 percent, aimed in particular at adding voice for the low income countries.
As a second step, shareholders have agreed that the Bank should undertake a comprehensive and intensive work programme to realign bank shareholdings, moving towards an equitable voting power between developed and developing countries. Such a work programme, according to the board, would also include voice reforms at the Bank’s affiliated member organisation, the International Finance Corporation (IFC).
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