- While the global economy is showing tentative signs of recovery, 43 low-income developing countries are still suffering the consequences of the global recession, which highlights the need to increase support to the poorest countries dealing with economic volatility and crisis, the World Bank has said.
In a paper prepared for the upcoming G-20 meeting in Pittsburgh, the World Bank said that 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 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.
“The poor and most vulnerable are at greatest risk from economic shocks - families are pushed into poverty, health conditions deteriorate, school attendance declines, and progress in other critical areas is stalled or reversed,” said World Bank Group President Robert B. Zoellick. “The poorest countries may not be well represented on the G-20, but we cannot ignore the long-term costs of the global downturn on their people’s health and education.”
“InterAction is pleased that the World Bank continues to insert the needs of the world’s poorest nations into the G-20 conversation,” said Samuel A. Worthington, President and CEO of InterAction, the largest coalition of U.S.-based non-governmental organizations focused on the world’s poor. “The G-20 countries must rapidly implement the London Summit pledge of $50 billion dedicated for low-income countries to aid them in designing and implementing the policies and social safety nets most developed nations have already established.”
Despite strong international efforts to cushion the impact of the global recession on Low-Income Countries, the paper states that low-income developing countries continue to suffer the consequences of the food, fuel and financial crises, and the poorest countries will need additional assistance to confront and move beyond the global recession.
The paper recommends coordinated policy action by the G-20 and others in the areas such as Agriculture to address food security, Small- and Medium-Sized Enterprises (SMEs) to stimulate growth in low-income countries, and Crisis Response Facility to ensure that quick and effective assistance can be provided to Low-Income Countries following shocks.
The World Bank noted that since the onset of the food and fuel crises nearly two years ago and the subsequent financial crisis and global recession, donors and development agencies have mobilised significant additional resources for Low-Income Countries. However, low-income developing countries have been hit hard by crises not of their making, and face daunting challenges that jeopardize years of progress in combating poverty, the paper said.
The paper also notes that several economic shocks resulting from the financial crisis are taking a severe toll on the poorest countries, including trade, private capital flows, remittances and tourism.
The crisis is slowing dramatically the steady progress achieved in reducing global poverty, notes the paper, pointing that in Cambodia, 62,000 garment workers have lost their jobs in this key sector for the economy, with women making up 90 percent of this workforce, while falling copper prices led in 2008 to the laying off of one quarter of Zambia’s mining workers.
The paper further describes how the World Bank Group stepped up its financial assistance to help developing countries mitigate the impact of the crisis over its past fiscal year, stating that for the World Bank Group as whole, the result has been record levels of activity - with $58.8 billion committed in FY09 to support countries hit by the global crisis, a 54 percent increase over the previous year.
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